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

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

> Long-term Loan: $4.16 million

> Retained Earnings: $22.50 million

> 98% Debentures:$482 million debentures issued at $1,000.

> General Reserves$7.50 million

> Preference Share Capital: 1,989.0 million shares issued at $4 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 1,247.0% per annum.

>The current market return on equity is estimatedto be 11.3% per annum.

>A merchant banker suggests that MRTLtd would have to offer a rate of 9.6% p.a. on anynew issue of 14-year debentures.

> Debenture coupons are paidsemi-annually, with 14years to maturity.

>The company tax rate is 12%.

> Preference shares of MRT Ltd are currently traded at $6.08 per share

>MRT Ltd ordinary shares have recently tradedat $11.90 and the company's financial managerbelieves that a beta of 57.0 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>