5. (15 Points) You are trying to determine the weighted average cost of capital (WACC) of a local firm listed in the stock exchange. Here is the information available to you: - Common Stocks: The firm has 20M shares outstanding and it is trading at $19.00 per share in the market. The variance of this stock's excess return is 0.01835 while the variance of the excess market return is 0.0108 . The covariance of this stock's excess return and the excess market return is 0.007236 . Finally, the risk-free rate is 2.7% and the market rate is 11.7% per year. - Bond 1: This is a 3.5% semi-annual coupon bond with the face value of $1,000. It has 20 years left to maturity and it is currently trading at $881.11 per unit. There are 150,000 units of this bond outstanding. - Bond 2: This is a 15-year zero-coupon bond with the face value of $1,000. Its current market price is $529.50 per unit and there are 140,000 units of this bond outstanding. - Preferred Stocks: The firm has 3M shares of preferred stocks outstanding. It offers an annual dividend of $4.80 per share and its current market price (per share) is $68.80. a. (10 Points) Based on the information above, please calculate the WACC if the corporate income tax rate is 22%. b. (5 Points) At what corporate tax rate is the WACC equal to 7.00% ? (If you use Solver or Goal Seek, please share the print screen with your answer)