4) Corporate bonds for ECN Inc. have an annual yield to maturity of 12% and market value of $18,000. Preferred shares of ECN Inc. just paid a dividend of $1 per share and are expected to grow by 2% every year. The market discount rate for ECN Inc. preferred shares is 8% and there are 1000 preferred shares outstanding. Common shares of ECN Inc. currently are $2 per share with 15000 shares outstanding. The market discount rate for common shares is 15%. The tax rate is 20% for all corporations. a a) b) If historically the P-E ratio is 15 for corporations like ECN Inc. and ECN Inc's most recent profit was $1500, is ECN Inc.'s stock over or under-valued by the market based on the P-E Ratio? Calculate the weighted average cost of capital for ECN Inc. ECN Inc. does not pay dividends on its common shares. It's free cash flow today was $5000. That is projected to increase for the next three years by 10% annually. After that it is only projected to increase by 3% forever after. Calculate the estimated value of ECN Inc. today using the WACC you calculated in part b)