Sadguru Industries has three sources of capital - the equity shares, preference shares and straight debt, costing 20%, 17% and 9% respectively. The proportions of different kinds of capital as reflected in the balance sheet and as per the market values are as under: Proportions Capital Book value Market value Equity 40% 80% Preference 10% 10% Debt 50% 10% A. Find out the WACC based on a) book values b) market values. (10 Marks) B. Sadguru Industries wishes to raise the capital for an expansion programme with equity, preference and debt at 10%, 35% and 55%. What would be the cost of capital for the expansion programme? (5 Marks)