Luther Industries has 25 million shares outstanding trading at $18 per share. In addition, Luther has $150 million in outstanding debt. Suppose S&P 500 index has a rate of return at 16% and the Treasury bill has a rate of return 4%. Beta coefficient of Luthers equity stock is 0.3. Luther's debt cost of capital is 7%, and the corporate tax rate is 30%. Standard deviation of Luthers stock return is 3.

(1) Please calculate Luther's weighted average cost of capital (WACC)

(2) Luther Industries is a growing company. The Free Cash Flow of the company is $450 million at the end of this year and maintains a constant growth rate at 4% from next year. Please calculate the firm value based on the cost of capital you estimated in WACC .

(3) Now you invest in a portfolio with the beta of 0.15 and the standard deviation of 1.5. You plan to use 50% of your current investment in the portfolio to buy Luthers stocks. Given that the correlation coefficient between Luthers stocks and your portfolio is -1. Please compare risk-return situation of your current portfolio with the one of the portfolio including Luthers stocks and determine whether to buy Luthers stocks or not?