Firm Z is the result of a merger between firm X and firm Y. Firm X was paying 2.50% on its debt and had a beta of 2.2. Firm Y was paying 3.50% on its debt and had a beta of 25. Firm X had 800 M$ assets and 30%-70% equity-debt structure while Firm Y had 200 MS assets and 20%-80% equity-debt structure. 1. What is the WACC of firm Z knowing that the size of the new entity allowed it to have a cost of debt of 1.5%and to have a beta of 1.75, and that the market where the three firms evolve has a premium of 6% and a risk free rate of 1.5%? 2. How does the WACC for Z compare to the WACC of X and Y? How do you explain this finding