1. The total market value of the equity of Living Inc. is $6 million, and the total value of its debt is $4 million. The treasurer estimates that the beta of the stock currently is 1.2 and the expected risk premium on the market is 10%. The treasury bill rate is 4%, and investors believe that the Living's debt is essentially free of default risk.

a. What is the required rate of return on Living stock?

b. Estimate the WACC assuming a tax rate of 21%.

c. Estimate the discount rate for an expansion of the company's present business.

*ANSWER MUST BE IN 2 DECIMAL.