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

30

55

Ordinary shares ($ million)

65

70

45

TOTAL CAPITAL ($ million)

100

100

100

Debt (YTM)

7%

6.5%

8.00%

Ordinary Equity Beta

1.3

1.4

1.05

The risk-free rate is 4% and the market return is currently 8.5%. Further, Company Tax rate is 30%.

a.Calculate the cost of ordinary shares for each entity. (6 marks)

b.Calculate the after-tax cost of debt for each entity. (3 marks)

c.Calculate the weighted average cost of capital (WACC) for each entity's capital structure. (6 marks)