In the last financial year Max plc reported earnings before interest and tax (EBIT) of 180m and an interest cover ratio of 1.8. Max's outstanding debt finance totals 950m and its leverage ratio is equal to 0.4. The corporate tax rate is 20%. Max's current share price is 2.1 and its dividends are expected to grow at a rate of 2%. The expected dividend for the next year is 0.09 per share. a) Calculate the cost of equity, the cost of debt, and the weighted average cost of capital (WACC) for Max plc. (8 marks) b) The share of Max has beta of 1.2. The current equity market premium and risk- free rate of return are 6% and 0.5% respectively. Suppose that you do not trust the estimation of the cost of equity on the basis of the dividend valuation model, is there an alternative way to calculate the WACC of the firm? What would be the strong and weak points of this alternative methodology as opposed to the methodology you used above? Explain your point