Problem 2 15. marks The current share price of the XYZ firm is 20% and it is expected to pay = 15 dies per share next year. Then, the growth rate in dividend is expected to be per year in fire Compute a) The cost of equity of the firm (2 mark) b) The firm has an existing debt which was issued three years ago with a coupon to 5%. If the firm issues a new debt at par with a coupon rate of 8%, what is the pre-tax cost of debt? (1 Mark) c) If the firm has 5 million common shares and its equity has a total book value of 105 million, and its debt has a market value of 45 million, what is the value of WACC the corporate tax rate is 20% and the price of the common stock as given in parts (a and ) (2 Marks)