FTP inc has $1$ million shares outstanding, and the stock is currently trading at $$10$ per share. The company has two different bonds

outstanding. First, it has $5000$ zero coupon bonds outstanding. Each zero coupon bond has a face value of $$1000,$ will mature in $5$

years, and is currently priced at $70\%$ of face value. Second, the company has $5000$ coupon paying bonds outstanding. Each coupon

paying bond is currently priced at $$1000\mathrm{.}00,$ and the YTM is $10\%.$ You have decided to calculate the cost of equity using the SML

equation. You have estimated that the risk$-$free rate is $5\%,$ and the expected rate of return on the market portfolio is $10\%.$ You also have

estimated that the equity beta of the company is $2\mathrm{.}5.$ Finally, the company faces a tax rate of $30\%.$ Using the information given,

calculate the cost of capital $($WACC$)$ of FTP inc. $(10$ marks$)$

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