Classic Ltd has provided you with the following information. All rates are effective annual rates. Assume a classical tax system.

• The company has bonds on issue with a face value of $1,000 that currently pay a coupon of $35 every six months. These bonds currently trade at par.
• 10-year Government Bonds yield 1.6% and the market risk premium is 5% pa.
• The beta of the companys equity is 0.9
• The debt-to-equity ratio is 2.2:1
• The corporate tax rate is 30%

Provide all answers as decimals rounded to 6 decimal places.

Q1. Calculate the firms required return on equity (r_E) and the companys after-tax WACC