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9. There are 2 million shares outstanding of Firm Z. The stock price of Firm Z is $20. The payout ratio is 60 percent and

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9. There are 2 million shares outstanding of Firm Z. The stock price of Firm Z is $20. The payout ratio is 60 percent and the return on retained earnings (i.e., ROE) is 10 percent. Firm Z is expected to pay a dividend of $2 next year. Firm Z also has 40,000 bonds with a 2.5 percent coupon and a current price quote of $980. The par value of each bond is $1000. The bonds will mature next year and will make annual coupon payments. The tax rate is 30 percent. What is the WACC of Firm Z? [30 points] (Challenging Problem) Air Palace is an all-equity firm and has a beta of 0.8. If the management decides to have 60% Debt and 40% their linrs nf onerations, what are the new betas of assets and equity? Briefly explain of

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