Questions 13 and 14 rely on the following information Handley Ltd is a firm that up until now has been involved in the manufacturing of plastic bottles used by milk distributors. It is considering pivoting towards producing wifi-enabled lighting systems and wants your help to estimate its after-tax weighted average cost of capital in order to assess the viability of this strategy. Handley Ltd currently have a debt-to-equity ratio of 0.6. They also have two sources of debt, commercial bills and long-term bonds, which, in aggregate, are each equivalent in market value to each other. The current yield on the commercial bills is 3.7% p.a. and the yield on the bonds is 4.1% p.a. The risk-free interest rate is estimated to be 3% p.a., the market risk premium 5.5% p.a. and the current beta of Handley Ltd shares is 0.7. The relevant corporate tax rate is 30%. 13. Estimate the after-tax WACC of Handley Ltd (in percentage terms to two decimal places e.g. 10.03%) [9 marks] 14. In no more than 3 lines explain whether it is appropriate for the company to use its WACC as a benchmark rate in assessing this new project. [2 marks] 15. In a world with corporate taxes, the market value of a firms assets can increase through the introduction of debt into the firms capital structure. In no more than 6 lines, comment on this statement. [4 marks] 16. The empirical evidence concerning financing decisions made by firms supports the idea that financing decisions are made randomly by firms with no real impact on firm value. In no more than 6 lines, comment on this statement. [4 marks] 17. Jensen Ltd is a firm that provides educational services tin the Australian marketplace. It is a listed company with 35,000,000 shares on issue. Jensen Ltd has just announced the results for the 2020/2021 financial year ending 30 June 2021. They report taxable income of $50,000,000 upon which they will be required to pay corporate tax at a rate of 30%. Jensen Ltd has a policy of distributing 75% of aftertax income as dividends. Paul is an Australian resident who owns 10,000 shares in Jensen Ltd and pays tax at a marginal rate of 45%. Document the total value of the dividend paid by Jensen Ltd to Paul ensuring that you account for the impact of both corporate and personal taxes. [10 marks]