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5) Cagliari Corporation (CC)s stock currently is selling for $50 per share. Last dividends paid by CC were $2.00 per share. CC is expected to

5) Cagliari Corporation (CC)s stock currently is selling for $50 per share. Last dividends paid by CC were $2.00 per share. CC is expected to grow at an 8 percent constant rate forever. The risk-free rate is 4 percent, Market risk premium is 6.6 percent, and CCs beta is 1.25. CC bonds are matured in 25 years with 8 percent coupon rate. The par value of bonds is $1000 and the interest payments are made annually. The bonds are currently selling for $960 per bond. CCs target capital structure is 40% debt and 60% common equity. CCs tax rate is 40% a ) What is the firms before-tax cost of debt, b) what is the firms after tax cost of debt, c) What is firms cost of common equity using CAPM approach, d) What is firms cost of common equity using discounted cash flow approach, and e) what is firms WACC using CAPM approach.

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