The activities of MEB are financed by both debt and equity. MEB has 3 million shares of ordinary equity outstanding, currently selling for 37 per share. The ordinary equity has a beta of 1.61. They also have 1 million 8 per cent preference shares outstanding that currently sell for 60 per share with par value of 100. MEB has 90,000 bonds outstanding that are selling at par (1,000). Equally risky bonds on the market are currently yielding 5.75 per cent. (200 points)

a)The following information is also available. The government T-bill is currently yielding 2.4 per cent, the rate of return on the market, Rm is 12 per cent, and the corporate tax rate is 20 per cent. What is the firms weighted average cost of capital (WACC)?