Complete the table below to calculate the WACC for Red Sea Ltd given the following data:

Balance Sheet Red Sea Ltd

Assets

Current Assets $2 400 000

Long Term Assets 6 000 000

8 400 000

Liabilities and Equity

Accounts Payable 1 200 000

Bank Overdraft 600 000

Debentures ($1000 par, 4.5% p.a., semi-annual) 3 000 000

Ordinary Shares ($6 par) 2 000 000

Retained Earnings 1 600 000

8 400 000

Additional information:

i) Overdraft rates are 5.5% p.a., compounded daily.

ii) The debentures mature in 6 years and are trading at par.

iii) Ordinary shares are trading at $18.00.

iv) The value of the fully-franked annual dividends are expected to grow at a rate of 3% p.a. for the foreseeable future. After all tax considerations, the value of the most recent dividend (just paid) to shareholders is $1.00.

iv) The effective corporate tax rate is 20%.

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