The Kay Company has the following Capital structure as at 31^st March, 2019.

Based on Book Value Based on Market Value % Costs

Debentures 300,000 330,000 7

Preference 100,000 110,000 9

Equity 1,500,000 1,700,000 15

Debt 200,000 180,000 10

Required :

Determine the Weighted Average cost of capital using :

1. Book Value weights, include formula used.
2. Market Value weights, include formula used.
3. What are the factors affecting Cost of Capital, minimum 150 words, explain each factor?