Anand Industries has three sources of capital - the equity shares, preference shares and straight debt, costing 18%, 15% and 7% respectively. The proportions of different kinds of capital as reflected in the balance sheet and as per the market values are as under: Proportions Capital Book value Market value Equity 50% 70% Preference 20% 15% Debt 30% 15% A. Find out the WACC based on a) book values b) market values. (10 marks) B. Anand Industries wishes to raise the capital for an expansion programme with equity, preference and debt in the ratio of 15%, 35% and 50%. What would be the cost of capital for the expansion programme