Instructions: Complete the following problem set. Submit a solution set that includes answers and supporting documentation--spreadsheet or a document showing the calculator inputs/long-hand calculations 1. Guzman Enterprises hired you to estimate their cost of capital. The company's target capital structure is equally split between debt and common cquity, but no preferred equity, Guzman's outstanding bonds are currently selling for 5676.86, have original maturity of 20 years, affective maturity of 9 years, par value of $1,000 and an annual coupon of 4% Guzman informs you that they do not intend to issue new shares of common cquity, and they have no preferred methods for calculating the cost of retained carnings. However, they do provide you with the following information: The company expects dividend growth of 3.5% forever. The common shares will pay a dividend of $1.90 at year end, and the shares currently trade for $22.35 each. Also, the company's common stock is risky enough that it commands a premium of 1.5% over the company's debt. If the firm faces a flat state-plus-federal tax rate of 25%, what is Guzman's cost of capital? 2. You are a financial analyst for Williams Enterprises, and you must estimate the appropriate discount rate for the company's upcoming projects. You have the following information about the company, the firm is financed with equal shares of debt and common equity and 10% preferred stock, Williams has outstanding bonds with 6 years left to maturity and an annual coupon of 7%, paid semiannually. The bonds currently trade for $953.07. In addition, the company has outstanding preferred shares with a par value of 100 and stated annual dividend rate of 8% that are currently trading for $72,70. The firm's common equity will derive fully from retained earning and no new common shares will be issued. Your team provides you the following information: The company has a beta or 125, the risk-free rate is 2%, the market risk premium is 8%, and the company's common stock is risky enough that it commands a premium of 3% over the company's debt. If the firm faces a flat state.plus-federal tax rate of 25%, what is Williams' cost of capital