Q#3. .(15 marks) JAS has the following B/S (in millions of dollars) at Dec. 31, 2012, prepared according to GAAP. The long- term debt, which was initially issued at par, is currently selling for 115% of par, plus accrued interest. The book values of all other items that are not part of JAS's core operations are reasonable estimates of fair market values, except the investment in Ross Inc., which is worth $185 million, and the common equity, which you are valuing. Cash (all operating in nature) $ 5.0 Accounts payable $ 6.0 Marketable securities 15.0 Wages payable 9.0 Computer equipment 40.0 Accrued interest 15.0 Other fixed assets 5.0 Long-term debt 300.0 Investment in Ross Inc. 100.0 Deferred taxes 7.0 Goodwill 720.0 Preferred equity (10%) 200.0 Common equity 348.0 Total 885.0 Total 885.0 Required Assume that the value of JAS's core operations (computed using a free cash flow model) is $2,000 million. Also assume JAS's cost of debt is 7% before taxes, its marginal tax rate is 25%, the risk-free rate is 4.75%, the equity premium is 5.5%, and JAS's equity beta is 1.50 so that the cost of its common equity capital is k. Compute WACC (to 3 decimal places) Preferred dividends are not tax deductible. The return on financial assets is 5%