Help & Explain (Please answer all)

1)

1. From the following information, calculate the weighted average cost of debt (k_d ), before tax. (accurate to two decimal places).

   Source	Market Value ($m)	Book Value ($m)	Cost of Debt (BT)
   Commercial Bills (kcb)	19.8	22	6.7%
   Bank Overdraft (kbo)	5	5	12.3%
   Bonds (kb)	9.2	5.5	9.8%

   		10.6%
   		8.36%
   		8.09%
   		9.60%
   		7.2%

2. Under what conditions can a company's current capital structure be used to calculate the weights for each source of funds?

   When implementing a new project is not expected to alter a company's target capital structure.

   When implementing a new project will alter a company's capital structure.

   When reliable market weights can be obtained.

   When the current structure reflects the target structure.

   Only when preference shares are not included in the measure for WACC.

   When only book values are available.

   3.

   If a company with a rating of BBB has on issue debentures paying a coupon rate of 6% pa and the market yield on similar BBB securities is 7% pa, what is the correct cost of debenture capital (k_db), before tax, that the company should use when estimating the WACC using the textbook WACC formula? The riskfree rate is 5% pa.and the Rm is 13% pa.

   		None of the other given options is correct.
   		13%
   		10%
   		7%
   		6%
   		5%