Lorraine Pty Ltd is a small company based in New York City. It is currently financed by $60$ per cent equity and $40$ per cent debt. The shareholders require a return of $20$ per cent. The debt providers require an interest rate of $25$ per cent before tax. The federal tax rate is $40$ per cent. The market value of ordinary stock is $$600000,$ and the market value of debt is $$400000.$

Required:

a$)$ Calculate the WACC for Lorraine Pty Ltd$.(2$ marks$)$

b$)$ How much profit must be generated to satisfy both the equity and debt providers? $(5$ marks$)$