2. Phillips Equipment has $0,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 6%. The company also has 1,000,000 shares of 5% preferred stock (par value $100) and 2 million shares of common stock outstanding. The preferred stock sells for $50 a share. The common stock has a beta of 2 and sells for $35 a share. The risk-free rate is 5% and the expected market return is 10%. The corporate tax rate is 40%. What is the firm's weighted average cost of capital? (Answer: WACC=9.19%) 3. The "Koalas Are Marsupials Not Bears" company has 20 million shares of common stock outstanding. The book value is $25 per share and the market price is $30 per share. The risk-free rate is 5% and the market expected return is 10%. The stock has a beta of 1. The company just paid a dividend of $2 per share. The firm has $200,000,000 debt outstanding ($% coupon rate) with 15 years remaining to maturity and currently sells for $1,000 (or par). If the company's tax rate is 40%, find the WACC. (Answer: WACC=S.70%)