Lubu PLC is one of the oldest listed companies on Lusaka Stock Exchange (LuSE). In the last five years, Lubu PLC has had a stable correlation (p) with LuSE of 0.821, with a standard deviation of returns of (o) of 42.66 percent, while the standard deviation () of LuSE market return is 35.12 percent. Furthermore, the expected market return of LuSE securities is 12 percent. The bonds issued by the Zambian government have an average yield to maturity of 20 percent. The capital structure of Lubu PLC consist of: (i) 2 million ordinary shares valued at K1.75 each, (ii) corporate bond valued at K2 million, currently at par, with a coupon rate of 10 percent, (iii) bank loan of K2.5 million with annual interest rate of 15 percent. The management of Lubu PLC will invest K750,000 in a new project, which will increase Lubu PLC's after-tax operating cash flows over the next few years by: Year 1 Year 2 Year 3 Year 4 K350, 600 K370, 400 K380, 300 K390, 100 Importantly, it is a policy of Lubu PLC to evaluate project using Weighted Average Cost of Capital (WACC). The corporation tax in Zambia is 35 percent. REQUIRED: a) Estimate the WACC for Lubu PLC. (8 marks)