7) (10 POINTS) Madison Badger Associates needs $10 million to finance a major investment. The project will be financed from the following sources: Source Amount Loans $2,000,000 Bonds $4,000,000 Stock $3,000,000 Retained Earnings $1,000,000 Comments 12% nominal APR 10% bond interest rate, semiannual premiums $8 dividend, selling price of $100/share 7% Effective tax rate is 35 percent with taxes paid annually. The stock price is stable. a) (2.5 POINTS) What is debt and equity mix for this investment? b) (2.5 POINTS) Calculate Weighted Average Cost of Capital (WACC). c) (2.5 POINTS) What is MARR, if the management has 2% expected return requirement and 3% risk factor? d) (2.5 POINTS) If the MARR is fixed at 15% for all the investments, should the company increase or decrease its equity sources to make this investment more desirable