1. A bond pays $80 per year in interest (8% coupon). The bond has 5 years before it matures at which time it will pay $1,000

- Assuming a discount rate of 10%, however the compounding frequency is semi-annually, should the price be higher or lower than that in question a? Why? Without calculation.

2. A sports marketing company has debt outstanding with a book value of $5.5 million and are currently trading in the market at 84% to their book value. The cost of debt is 7.5% p.a. It also has 500,000 shares on issue with the market value of $8.95 per share. The risk free rate in the market is 3% and the expected market return is 11% p.a. Given an estimated beta of 1.3 and a company tax rate of 30%, what is the WACC for the sports marketing company? (14 marks)