Using the data in the given table, answer the questions asked in parts (a), (b) and (c).

Items

Capital Structure

Wet n Wild

Taronga Zoo

Jamberoo

Debt ($ million)

35

40

60

Ordinary shares ($ million)

65

60

40

TOTAL CAPITAL ($ million)

100

100

100

Debt (YTM)

6.5%

7.6%

8.50%

Ordinary Equity Beta

1.25

1.15

1.18

The risk-free rate is 4.5% and the market return is currently 8.5%. Further, Company Tax rate is 30%.

Required:

a.Calculate the cost of ordinary shares for the selected two entities (i.e., Taronga Zoo and Jamberoo). (6 marks)

b.Calculate the after-tax cost of debt for the two selected entities (i.e., Taronga Zoo and Jamberoo).(3 marks)

Calculate the weighted average cost of capital (WACC) for the selected two entities (i.e., Taronga Zoo and Jamberoo).