1. Determine the WACC of BA620 Corporation, given the following data:

1. BA620 issued bonds with a coupon rate of 10% paid semi-annually. The bond has ten years maturity. Tax rate is 25%. The bond is sold at $1,050.00. Bond has a par value of $1,000.00.
2. Preferred stock has a par value of $100, with a 5% dividend, currently sold at $95.00.
3. Common stock recently paid dividends of $3.50, growth rate of 5%. The beta is 1.25, risk free rate of 4% and market return premium of 8%.

The companys capital structure is =: 25% Long-term debt, 15% preferred stock and the rest from common stock. (10 points)

2. BA620 is evaluating the following capital structure. Unlevered beta is 0.75, risk-free rate =1.5% and market risk premium=6%. Free cashflow is $500 million and EBIT is $400 million. The company has 200 million shares. Tax rate is 25%. Which is the best capital structure for BA620 company? Fill in the necessary variables. (50 points)

0% 10% 20% 30% 40% 50% Percent of debt financing(wd) 100% 90% 80% 70% 60% 50% Percent of equity financing(ws) 1.beta 2.Rs Rd 3.Rd(1-1) 5% 5.2% 6.0 % 6.40% 7% 8% 4.WACC 5.Vop 6.Debt 7. Equity 8. Number of shares 9. Share price 10. Net Income 11. EPS