Following are the two proposed financing pattern of a company: (10 Marks) Amount to be financed - $5,000,000 Plan A - Equity - $5,000,000 Plan B - Equity - $2,000,000 Pref shares - $2,000,000, Bank loan - 1,000,000 Risk free of the country is 6%, Beta of the company is 0.9 and risk premium is 7%. Preference dividend is 8%, interest rate on bank loan is 12% (in both scenarios), tax rate of the company is 30%. Compute the WACC for plan A and plan B. Which is a better financing, if the objective is lowering the WACC. Suppose the tax rate of the company is 40%, what would have been the WACC of the company, in Plan B.