Required:a) Calculate the Weighted Average Cost of Capital for Joncat ple (WACC).b) Explain the advantages and disadvantages of using WACC for calculating discount rate that is used for investment appraisal purposes.c) If Joncat were raising finance for a new project discuss the options available and recommend an appropriate source of finance.

Question 3 Joncat plc runs a chain of children's book stores around Ireland. The following table shows its balance sheets as of 31 st December 2014. ASSETS E Non-Current Assets Buildings 855,000 Land 1,250,000 Current Assets Inventory 95,000 Cash Equivalents 85,000 Accounts receivable 124,000 Other assets 93,500 397,500 2,502,500 EQUITY & LIABILITIES Capital and Reserves Ordinary share capital 972,000 Non-current liabilities Bond 1,000,000 Preference Shares 452,000 Current Liabilities Accounts payable 78,500 2,502,500 Additional information 1. Joncat plc has E1.00 ordinary shares which are currently being traded at 61.64 and shareholders expect a 13% return. ii. For WACC calculations Joncat plc uses book value of debt. iii. Joncat plc pays corporation tax at 25%. iv . The 8% bond is redeemable in 20 years. Preference shareholders get a return of 11%