1.GE has 20,000 bonds outstanding with a 7% coupon rate, paid semiannual. There are 20 years left to maturity and have a market price of 990.00 (face value 1000). The company also has 700,000 shares outstanding and currently sell at $32 a share. GE has a beta of 1.09. You expect the market risk premium to be 9% and the risk free rate is currently 2%. Ge also has 200,000 shares of preferred stock which pays an annual dividend of $5. The preferred stock is currently trading at $29 a share. Assuming a 21% tax rate, what is the WACC?

2. You need to raise one billion dollar for a new project. JP Morgan states that they will charge you a 7.5% flotation fee on equity, and a 4.5% flotation fee on debt. If you dont want to alter the companys capital structure, which is currently a Debt-to-Equity Ratio of 0.5, how much do you need to raise so that you can fund your project?