Burgundy Inc. is financed through bonds and common stock. The bonds were issued five years ago at a par value of $$100($total fund raised through bond issuing is $$5$m$).$ These bonds have a yield to maturity of $8\mathrm{.}48\%$ and are currently trading at $$105.$ The company$$s shares have a market value of $$4$m$,$ the return on risk$-$free government bonds is $8\%$ and the market risk premium has been $5\%.$ Burgundy$$s shares have a lower than average risk and its historic beta is $0\mathrm{.}85.$ The corporate tax rate is $30\%.$ Burgundy has a net asset figure of $$3\mathrm{.}5$m showing in its balance sheet.

Calculate the cost of debt and cost of equity capital.

Calculate the weighted$-$average cost of capital $($WACC$).$

Should Burgundy use the WACC for all future projects? Explain your answer.