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 .