Question4 a) Explain the significance of the weighted average cost of capital (WACC) to a finance manager when making investment decisions. (6Marks) b)Max Ltd is investing in a major capital budgeting project that will require the expenditure of $10million. Their board of directors decided to raise funds as follows: 1)The book value and the market value of Max Ltd bonds are at $1 500 000 and $2 000 000 respectively. ii) $2 million of 8% preferred stock at market value but the accountant says the book value is $ 1800 000. iii)there are 3 000 000 common stock. The market price per share of Max Ltd.'s common shares is quoted at $2. The company estimates is after-tax cost of debt to be 9%, its cost of preferred stock to be 8%, and the cost of new common stock is 13%. Tax rate is 40% Required: Calculate Max Ltd weighted average cost of capital to be used for this project. (12 Marks) (Total 18 Marks)