i. Suppose the stock of the Quatram Company, a publisher of college textbooks, has a beta () of 3. The firm is 100-percent equity financed; that is, it has no debt. Quatram is considering a number of capital-budgeting projects that will double its size. Because these new projects are similar to the firms existing ones, the average beta on the new projects is assumed to be equal to Quatrams existing beta. The risk-free rate is 7 percent. What is the appropriate discount rate for these new projects, assuming a market-risk premium of 9.5 percent?

ii, Suppose stock in Watta Corporation has a beta of 0.80. The market risk premium is 6 percent, and the risk-free rate is 6 percent. Wattas last dividend was RM1.20 per share, and the dividend is expected to grow at 8 percent indefinitely. The stock currently sells for RM45 per share. What is Wattas cost of equity capital?

iii, In addition to the information given in the previous problem, suppose Watta has a target debt-equity ratio of 50 percent. Its cost of debt is 9 percent before taxes. If the tax rate is 35 percent, what is the WACC?