Question $1[10$ Marks$]$King Trading Ltd has achieved total credit sales amounting to R$1000000,$ with standard payment terms set at $30$ days.However, the current average collection period has extended to $47$ days, necessitating the company to finance its operationalexpenses at an interest rate of $2\%$ above the prevailing prime rate of $12\%.$ Additionally, the company's bad debt rate stands at$1\mathrm{.}2\%.$To address these challenges, King Trading Ltd is considering a proposal from Circle Consultants $($Pty$)$ Ltd to factor the entirecredit sales. Circle Consultants $($Pty$)$ Ltd have outlined the following terms: Factoring Charges: $1\mathrm{.}7\%$ of the total credit sales.$$ Advance Rate: $100\%$ of the total debtors' book will be advanced immediately to King Trading Ltd$.$ Interest Rate on Advance: Prime lending rate plus $5\mathrm{.}5\%.$ Collection Services: Circle Consultants $($Pty$)$ Ltd will manage the collections, resulting in administrative cost savings ofR$9000$ for King Trading.Required:Analyse the financial implications for King Trading Ltd if it decides to accept Circle Consultants $($Pty$)$ Ltd$\text{'}$ factoring proposal.Your analysis should include calculations of the costs and benefits associated with the factoring arrangement. Conclude with arecommendation on whether King Trading Ltd should proceed with the factoring agreement. Question $2[20$ Marks$]$LTF Ltd uses a combination of shares and debt in their capital structure. The company's beta is $1\mathrm{.}1$ with a risk$-$free rate of $7\%$and a market return of $14\%.$ The company is taxed at $27\%.$ The company issued $1000000,$ R$5$ ordinary shares with a current market price of R$7,50$ per share. The latest dividendpaid was $50$cents and an $6\%$ average growth has been maintained. The company issued $20000,$ R$8,10\%$ preference shares with a current market price of R$11$ per share.$$ LTF Ltd has a public traded debt with a face value of R$300000$ issued at $11\%.$ The debentures were issued at R$1,50$and is currently trading at R$1,75.$ A bank overdraft of R$200000$ was taken out at an annual interest rate of $16\%.$Required:Calculate the weighted average cost of capital using the Capital Asset Pricing Model to calculate the cost of equity.