6. (14 Points) You are trying to determine the weighted average cost of capital (WACC) of a local firm listed on the stock exchange. Here is the information available to you: - Common Stocks: The firm has 3.5M shares outstanding and it is trading at $28.10 per share on the market. The variance of this stock's return is 0.1794 while the variance of the market portfolio's return is 0.0292. The correlation between this stock's return and the market return is 0.445. Finally, the risk-free rate is 3% and the market rate of return is 11% per year. - Bond 1: This is a 4% semi-annual coupon bond with the face value of $1,000. It has 15 years left to maturity and it is currently trading at $849.50 per unit. There are 110,000 units of this bond outstanding. - Bond 2: This is a 20-year zero-coupon bond with the face value of $1,000. Its current market price is $337.20 per unit and there are 80,000 units of this bond outstanding. a. (8 Points) Based on the information above, please calculate the WACC if the corporate income tax rate is 20%. b. (6 Points) Please ignore the stock price in the previous part. At what stock price is the WACC equal to 8.43% ? (If you use Solver, please share the print screen with your answer) 6. (14 Points) You are trying to determine the weighted average cost of capital (WACC) of a local firm listed on the stock exchange. Here is the information available to you: - Common Stocks: The firm has 3.5M shares outstanding and it is trading at $28.10 per share on the market. The variance of this stock's return is 0.1794 while the variance of the market portfolio's return is 0.0292. The correlation between this stock's return and the market return is 0.445. Finally, the risk-free rate is 3% and the market rate of return is 11% per year. - Bond 1: This is a 4% semi-annual coupon bond with the face value of $1,000. It has 15 years left to maturity and it is currently trading at $849.50 per unit. There are 110,000 units of this bond outstanding. - Bond 2: This is a 20-year zero-coupon bond with the face value of $1,000. Its current market price is $337.20 per unit and there are 80,000 units of this bond outstanding. a. (8 Points) Based on the information above, please calculate the WACC if the corporate income tax rate is 20%. b. (6 Points) Please ignore the stock price in the previous part. At what stock price is the WACC equal to 8.43% ? (If you use Solver, please share the print screen with your answer)