Riverwood Ltd has $100$ million $$1$ ordinary shares in issue with a current market value of $$2\mathrm{.}00$ per share. The cost of ordinary shares is estimated at $5$ per cent. The business also has $5$ per cent irredeemable loan notes in issue with a nominal value of $$60$ million. These are currently quoted at $$60$ per $$100$ nominal value.

Ignore the corporate tax, show all calculations

$($a$)$For Riverwood Ltd$,$ what is the weighted average cost of capital of the business? $(20$ marks$)$

$($b$)$ Discuss the advantages of a business having ordinary share capital and loan capital as part of its capital structure. $(5$ marks$)$