Problem #5:

Data for Thaler Inc. is given below:

	A	B
1	Tax rate	0.21
2	Equity	170,000
3	Debt	85,000
4	Div. payout ratio	0.7
5	P0	76.03
6	g	0.05
7	EPS	3.88
8	Cost of debt	0.03

Part 1) What is the cost of equity? (Hint: EPS and div. payout ratio can determine the next period's dividend)

Part 2) What is the weighted average cost of capital?