ChocoGalore Ltd is an Australian company that manufactures chocolate desserts. The financial statements for ChocoGalore for the last 2 years are as follows: Income Statement for the year ended 30 June Sales Revenue 1, 500, 000 1, 300, 000 Cost of goods sold 700, 000 450, 000 Gross Prot 800, 000 850, 000 Selling, General and Admin Expenses: Interest expenses 40, 000 40, 000 Selling expenses 150, 000 Research and development (RSID) 250, 000 Salaries and others 130, 000 Total SGA expenses 570, 000 Net profit after income tax 16 1, 000 1 12, 000 Excerpts of the Balance Sheet as at 30 June 2022 Liabilities Payables 16, 000 Short-term debt 40, 000 Long-term debt 300, 000 Shareholders' Equity Share capital 400, 000 Retained profit 362, 000 Additional information about ChocoGalore is as follows: R&D costs are currently expensed, ChocoGalore estimates that R&D costs relating to new chocolate desserts will generally provide benefits over a period of approximately 3 years. ChocoGalore incurred R&D cost of $200, 000 2019 and $300, 000 in 2020. Tax rate is 30%. Use year-end figures to calculate weighted average cost of capital (WACC). Interest rate before tax: long-term debt = 4.00% and short-term debt = 7.00% Use required ROE of 10.00% as the basis of cost of equity