Question 2 [12 Marks] You have been presented with following information from Bogus Ltd. Source of Capital Book Value Market Value Before-tax cost Long-term debts 22 464 000 14 040 000 9% Preference shares 224 640 336 960 14% Ordinary shares 5 896 800 16 848 000 18% Total 28 585 440 31 224 960 Bogus Ltd has an average tax rate of 28% Required: a) Calculate the WACC based on the book value weights. (10 marks) b) Compare the book value and market value method of calculating the WACC above. (2 mark) 3/4