Casper's Inc. just paid $1.5 dividend per share, and expects that the annual growth rate of dividend per share in the future will be 10%. The firm has 60,000 shares of common stock outstanding at a market price of $49 per share, and the stock's beta is 1.26. The firm has 9,800 shares of 12.24% preferred stock with a market value of $100 a share. The firm has $1,100,000 outstanding bonds with the yield-to-maturity rate at 8.75%. The corporate tax rate is 33%. The risk-free rate is

3.2% and the market risk premium is 9.1%. Please answer the following questions:

a) What should be the cost of equity for the firm if using the Dividend Growth Model? What should be the cost of equity for the firm if using the CAPM (i.e., SML)? Then, based on the average of these two estimates, what is the cost of equity for the firm?

b) Please calculate the weighted average cost of capital (WACC) for the firm. Assume the cost of equity is equal to the average of two estimates calculated in part (a).