7. 13.46 Midac Corporation wants to arrange for $37.5 million in capital to finance manufacturing a new consumer product. The current plan is 60% equity capital and 40% debt financing. Calculate

(a) the WACC, and

(b) MARR for the following scenario: Equity capital: 60%, or $22.5 million, via common stock sales, with 40% of this amount paying dividends at a rate of 5% per year, and the remaining 60% retained earnings, which currently earn 9% per year. Debt capital: 40%, or $15 million, obtained through two sources: bank loans for $10 million borrowed at 8% per year, and the remainder in convertible bonds at an estimated 10% per year bond dividend rate. Rate of return: 8% above the average cost of capital with no inflation considered.