The risk-free rate is 1.5% p.a., the market risk premium is 6.5% and the corporate tax rate is 30%.Estimate METCO's weighted average cost of capital (WAC.

METCO has an issued capital of .153 million shares currently trading at $4.70 and the shares have a beta of1.05. The company also has 1.75 million preference shares on issue. These have a face value of $100, a remaining term to maturity of fouryears and carry a fixed dividend of 3% p.a., paid semi-annually. The preference shares are currently trading at a yield of 5.5% p.a. and a price of $108.37 each. Aside from bank debt of $210 million bearing an interest rate of 4.5% p.a., METCO also has 2.5 million semi-annual coupon bonds on issue, each with a face Value of $100, and carrying a coupon of 6% p.a. The bonds have a remaining term ho maturity of two years and are trading at a yield 014.2% p.a. and a price of $103.42 each.