A firm currently has the following capital structure which it intends to maintain.

 Debt: $3,000,000 par value of 9%, 9-year bonds outstanding with an annual before-tax yield to maturity of 7.67% on a new issue.

Common stock: 70,000 shares outstanding currently selling for $50 per share. 

The firm expects to pay a $5.50 dividend per share one year from now and is experiencing a 3.67% growth rate in dividends, which it expects to continue indefinitely. 

The firm's marginal tax rate is 30%. The company has no plans to issue new securities.

 

a. Determine the capital structure of this company.

b. What is the after-tax cost for each source of capital

c. Determine the WACC for this company.