Angel pic, a listed industrial business, is considering a major investment. The investment projects team needs an appropriate rate at which to discount the estimated after-tax cash flows for the investment. Following the business's normal practice, this is to be based on the weighted average cost of capital (WACC). Figures, relating to long-term financing, included in the business's most recent statement of financial position are: Description RM (million) Ordinary shares of RM0.50 each (160 million) 80 Share premium account 27 Revaluation reserve 26 Retained profit 9 7.2% loan notes 67 The loan notes interest for the current year has just been paid. Interest is payable at the end of each of the next three years and all of the loan notes is to be redeemed, in cash, at a 5% premium, at the end of three years. A dividend of RM0.18 per share has just been paid. Dividends have shown an average annual growth rate of 7% over recent years. The current share price is RM0.21 and the loan notes have a market value of RM97 (per RM100 nominal). The corporation tax rate is expected to be 30% for the foreseeable future. (a) Estimate the business's WACC. Explain your workings and any assumptions made. Justify the basis of the weightings used to calculate the business's WACC. (9 marks) (b) Explain any criticisms which could be made of using the figure deduced in (a) as the discount rate for assessing the investment under consideration. (8 marks) (c) Explain how the capital asset pricing model (CAPM) could be used as an alternative means of ducing a suitable disco rate to be used in the assessment of the investment. (8 marks) Hint: Your explanation should include an outline of the model's strengths and weaknesses