QUESTION B4 (4 + 4 + 2 + 5 = 15 marks) Woods Ltd has on its books the following amounts and after-tax cost for each source of capital: Source of capital Long-term debt Preference capital Ordinary equity Book value (S) After-tax cost(% 20,000,000 10,000,000 40,000,000 9.5 11.5 Required: a) Calculate the firm's weighted average cost of capital (WACC) using book value weights. (4 marks) b) What is the cost of capital? What role does it play in making long-term investment decisions? (4 marks)