The following table shows the balance sheet for Holiday Homes Ltd. The firm is in the business of renting out holiday homes for short-term vacations. The firm’s long-term
borrowings are secured by its properties owned and short-term borrowings are used as a permanent source of financing. The interest rate on bank debt is 9% per annum and the interest rate charged on secured debt is marginally lower at 8% per annum. The firm has 20 million shares outstanding and the market valued each share at $80 per share. The expected return on its stock is 20%.

Determine the weighted average cost of capital, WACC, for Holiday Homes Ltd. The marginal tax rate for Holiday Homes Ltd is 17%.
 

(in millions) Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Current assets Properties Other assets Non-current assets Total assets 202X (in millions) 150 300 8 50 508 2,800 200 3,000 3,508 Interest-bearing borrowings Trade payables Employee benefits Current liabilities Long-term borrowings Common-stock Retained earnings Total liabilities and equity 202X 360 200 75 635 1,680 1,000 193 3,508