(a)Company A is funded as follows:

Balance Sheet Extract

Ordinary Shares (50n) 2000

12% Loan Notes 1500

8% Preference Shares (K1) 500

Bank Loan 750

Details on these are as follows.

The company has an equity beta of 1.2. Government bonds are currently trading at 6% and the average market risk premium is 7%.

The Loan notes are currently trading at K106 and are redeemable at par in 5 years' time.

The preference shares are trading at 92n.

The bank loan has an interest rate of 10%.

The current share price is K1.25.

The tax rate is 30%.

Calculate the Weighted Average Cost of Capital.(14 marks)

(Total: 20 marks)