Company Y has a target debt to equity ratio of 50%. Currently its book debt to equity ratio is 60% and it expects to revert to the target ratio in the near future. The company has an after tax market cost of debt of 9% and a market cost of equity of 20%. What is the WACC for the company?

• A. 12.33%

• B. 16.67%

• C. 13.50%

• D. 16.33%

2.) You have R1000 which you want to save. A friend argues with you that banks are bound to fail, so you should keep the money in your mattress. If inflation is expected to be positive in the medium term, would this be a good or bad idea if you wish to preserve buying power? Choose the most correct answer.

• A. It would be a bad idea, inflation will erode the value of the money over time.

• B. It would be a good idea, the current crisis will lead to negative returns from banks.

• C. It would be a bad idea as moths could get to the money.

• D. It would be a good idea as uncertainty is high