Please answer all question and workings.. Tq

Question 4 Guanteng plc has the following capital structure on their most recent balance sheet: Ordinary shares of $1 5% Preference Shares of $1 5% Convertible Debentures Corporate reserves 450,000,000 150,000,000 25,000,000 80,000,000 The current market value is $1.60 for the ordinary shares. 0.50 for the preference shares and $110 for a loan stock of nominal value of $100. The debentures are redeemable in three years' time at par value or can be converted into 50 shares at that point. It is believed that the share price will grow at 3% during this time period. Note that the preference dividend has just been paid, while an ordinary share dividend of $0.20 per share and the debenture interest are just about to be paid. The company's marginal rate of taxation is 20% and the dividend growth model estimates annual growth at 2% REQUIRED a) Explain what is meant by the term cost of capital' (3 marks) b) Calculate the weighted average cost of capital (12 marks) c) The weighted average cost of capital is deemed inappropriate to use in investment appraisal when both business risk and gearing are changed. Discuss why this is so and how a firm would undertake an appraisal in such circumstances. (10 marks) (Total: 25 marks)