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4. Imperial Ltd. has 10 million shares of common stock outstanding. The current share price is $75, and the book value per share is $30.
4. Imperial Ltd. has 10 million shares of common stock outstanding. The current share price is $75, and the book value per share is $30. It also has two bonds outstanding. The first bond issue has a total face value of $60 million, has a 7 percent coupon rate, and sell for 93 percent of par. The second issue has a total face value of $40 million, has a 8 percent coupon rate, and sells for 104 percent of par. The first issue matures in 21 years, the second one in 6 years. The first bond has a YTM of 7.68%, the second bond has a YTM of 7.17%. The most recent dividend was $4.50 and the dividend growth rate is 5% forever. The tax rate is 20%. What is Imperial Ltd.'s RE, RD (which is the weighted-average cost of debt), and WACC? (16 Points)
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