QUESTION $6$

a$)$ Book values or market values? Indicate which one is used in calculating the WACC and why it is that one and not the other one.

$(3$ marks$)$

b$)$ It has been suggested that while debt is less risky than equity from the perspective of an investor, it is riskier from the perspective of the firm, and vice versa for equity. What is your view $($i$.$e$.,$ agree or disagree$)?$ Explain. $22+$

$(3$ marks$)$

c$)$ You obtain the following information for MBSM Co$.$ Ltd$.$

$\backslash$table$[[$After Tax Profits$/$Net Income $($one year from now$),$$$30,000,000\mathrm{.}00$