TN plc's capital structure extracted from the balance sheet is shown below. Ordinary shares of 50 pence each: 6.5millions 7% preference shares of 1.00 each: 4.5millions Reserves: 5millions 8% loan notes: 12millions The business pays corporation tax at the rate of thirty percent and is expected to earn a consistent annual profit, before interest and tax, of five million sterling pounds. The current market prices of the business's shares are 60 pence for preference shares and 75 pence for ordinary shares respectively. The loan notes are irredeemable and have a market value of 100 per 100 nominal value. a)Assuming all profits are paid out as dividends to shareholders and there is no dividend growth, calculate the weighted average cost of capital of QTN plc. b)Discuss critically the extent to which the weighted average cost of capital approach adopted in question a) is useful in discount rate estimations