Michs Ltd has provided you with the following information. All rates are effective annual rates. Assume a classical tax system.

• The company has bonds on issue with a face value of $1,000 that currently pay a coupon of $40 every six months. These bonds currently trade at par.
• 10-year Government Bonds yield 5% and the market risk premium is 4% pa.
• The beta of the companys equity is 1.2
• The debt-to-equity ratio is 2.5:1
• The corporate tax rate is 30%

a) Calculate the firms required return on equity (rE). 6dp

b) Calculate the after tax cost of debt. 6dp

c) Calculate the weighting of Debt (D/V). 6dp

d) Calculate the companys after-tax WACC. 6dp