The following figures have been extracted from the financial statements of MRT Ltd:

> Book Value of Current Assets $35 million and Current Liabilities $29.25 million

> Long-term Loan: $4.47 million

> Retained Earnings: $22.50 million

> 99% Debentures: $539 million debentures issued at $1,000.

> General Reserves $7.50 million

> Preference Share Capital: 2,040.0 million shares issued at $5 per share

> Ordinary Share Capital: 9 million shares issued at $1 per share

The following additional information has been provided by the manager of the company:

> Government bonds are currently yielding 1,258.0% per annum.

> The current market return on equity is estimated to be 11.4% per annum.

> A merchant banker suggests that MRT Ltd would have to offer a rate of 9.2% p.a. on any new issue of 11-year debentures.

> Debenture coupons are paid semi-annually, with 11 years to maturity.

> The company tax rate is 13%.

> Preference shares of MRT Ltd are currently traded at $6.24 per share

> MRT Ltd ordinary shares have recently traded at $10.80 and the company's financial manager believes that a beta of 58.0 is appropriate for the company.

Requirement-A. Using relevant information, estimate the weighted average cost of capital for MRT Ltd. <4 marks>

Requirement-B. Using your own words, explain any four relevant factors that can affect the cost of capital. <2 marks>