Q1 A Pinder Ltd operates under the classical tax system. The market value of Pinder Ltds debt and equity are $2,000,000 and $3,000,000, respectively. The before-tax cost of borrowing for Pinder Ltd is 8% and the cost of equity is 15%. If Pinder Ltds tax rate is 30%, what is Pinder Ltds weighted average cost of capital?

b Pinder Ltd is currently trading at $15 per share and is planning on a dividend of $2 per share. The capital gains tax and dividend income tax for Pinder Ltds shareholders are 10% and 20% respectively. Based only on the information above, what is the expected share price of Pinder Ltd on the ex-dividend date? c