Forrest Ltd has on its books the following amounts and After-tax cost for each source of capital: Source of capital Market value ($) Pre-tax cost (%) Long-term debt 30,000,000 4.5 Preference capital 20,000,000 10.5 Ordinary equity 50,000,000 12.5
Required:
a) Calculate the firm's weighted average cost of capital (WACC) using market value.