Schadler Systems is expected to pay a RM3.50 dividend at year end (D 1 = RM3.50), the dividend is expected to grow at a constant rate of 6.50% a year, and the common stock currently sells for RM62.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 40% debt and 60% common equity. What is the companys WACC if all equity is from retained earnings? Do you agree with such a capital structure? What would you recommend? Comment.