Purple Ltd. is a company that makes eco-friendly products for sales in Australia. The company has 150 million ordinary shares outstanding and a beta of 1.30. It currently trades at $25 per share. The market risk premium is 9.0% per annum and the risk-free rate is 4.0% per annum. St Lucia Purple has 1 million semi-annual coupon bonds with a face value of $1000 each. At present, its bonds trade at 120% of par. The yield to maturity of the bonds is quoted at 7.5% per annum. The bonds have a coupon rate of 8.0% per annum and 15 years to maturity. St Lucia Purple is subject to 35% corporate tax rate. St Lucia Purple is planning to produce a new line of green products for Brisbanes market. Before deciding on whether to go ahead with this potential project, the company has hired you to estimate the weighted average cost of capital (WACC) in order to evaluate the NPV analysis of this project.

Calculate the following (round your answers to two decimal places).

1. a) What is the cost of equity for Purple?

2. b) What is its cost of debt?

3. c) What is its market value of equity?

4. d) What is its market value of debt?

5. e) What is the market value of Purple?

6. f) What is the WACC for Purple?