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: $6.61 million > Retained Earnings: $22.50 million > 9% Debentures: $27 million debentures issued at $1,000. > General Reserves $7.50 million > Preference Share Capital: 7.6 million shares issued at $3 per share > Ordinary Share Capital: 34 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 5.7% per annum. > The current market return on equity is estimated to be 13.8% per annum. > A merchant banker suggests that MRT Ltd would have to offer a rate of 13.4% p.a. on any new issue of 23-year debentures. > Debenture coupons are paid semi-annually, with 23 years to maturity. > The company tax rate is 31%. > Preference shares of MRT Ltd are currently traded at $1.67 per share > MRT Ltd ordinary shares have recently traded at $4.50 and the company's financial manager believes that a beta of 1.7 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>