As the CFO of Getafix Inc., you are interested in calculating the cost of capital for the firm. Getafix uses both equity financing and debt financing.

Please show all calculations in excel

Part a: The firm's debt financing is in the form of a 20-year coupon-paying bond. The face value of the bond is $1,000 with a 5% coupon (paid semi-annually). What is the firm's cost of debt if the bond price is $980?

Part b: The market return in 10%. The return on treasury bonds is 3%. The equity beta of Getafix is 1.2. What return should equity holders demand on Getafix's equity?

Part c: Getafix's marginal tax rate is 20% and they finance 25% of their company with debt and 75% with equity. What rate should Getafix use to discount its free cash flows?