(1)

total capital=10^9+8*10^8+5*10^8+10^10=1.23*10^10

return on common stock=3.25%+1.7*(9.75%-3.25%)=0.143

WACC=10%*10^9/1.23*10^10+0.143*(8*10^8+5*10^8)/1.23*10^10+6%*10^10/1.23*10^10*(1-30%)=0.0574

(2)

Evaluation of projects with similar risks – When a new project with similar risks is the same as an existing project in the same industry, companies often use the WACC as a benchmark to decide whether the project should proceed.

Financial and real estate companies with less self-owned funds cannot use WACC.

WACC also cannot be used if the floating cost of marginal capital and financial risk are considered