Garena Inc. is financed with a 2-year coupon bond and common equity. The bond pays 5% annual coupons, has a par value of $50 million, and is going to mature in 2 years. The bond is currently trading at 101 percent of its par value. Garena has 1 million shares outstanding. Its shares are currently trading at $62.5 per share and has a beta 0.9. The current risk-free rate is 4% and the expected market return is 9% per year. The next dividend will be paid TWO year from today, and the amount will be $5.4. Suppose the firm is expected to pay the same amount of dividend every year starting from year 2. The corporate tax rate for Garena is 25%.

(1) What is the before-tax cost of debt for Garena?

(2) What is the cost of equity for Garena? Estimate it using both the CAPM and the discount dividend model, and then take the average.

(3) Calculate the after-tax WACC for Garena. (2pts)