Very Ltd. has the following capital structure: 1 million ordinary shares with a current market value of $48 per share 200,000, $100 par value, 6% preferred shares with a current market value of $80 per share 40,000, $1,000 par (face) value bonds with semi-annual coupon payments of $40 per bond. Additional information: Very Ltds ordinary shares have an estimated beta () of 1.3. Very Ltds bonds have 7 years to maturity and sell for 90 per cent of their par (face) value. The risk free rate of interest is 7 percent; The market risk premium is 8 percent The company income tax rate is 30 percent. Required (a) Calculate Very Ltds weighted average cost of capital (WACC) (b) Briefly describe the purpose of calculating the WACC.