Interest rates have risen in recent times and the compa is paying more interest on the variable rate bank loan than was originally expected. The directors of ABC LTD are keen to understand how interest rates are determined. The expansion into the East Africa is progressing well and further expansion in the future is likely. During their trips to the East Africa a number of key clients and contacts have suggested that ABC LTD should consider the use of Loan financing for any future expansion. The risk free rate is 4% and the market premium is 7%. Corporation tax is 28%. 1. u. Required: Calculate the WACC of ABC LTD. (10 marks) Explain the theoretical factors which determine the term structure of interest rates and hence the interest rates faced by a company such as ABC LTD (5 marks) (25 Marks)