Silver Limited has just issued a 9-year bond with a face value of $1000 and a coupon rate of 5% p.a. The bond trades at a yield to maturity of 6.4% p.a. compounding semi-annually.

The companys ordinary shares are currently trading at $22. They just paid a dividend of $2.40 which is expected to grow at a constant rate of 3% p.a. forever.

The debt-to-equity ratio is 40%. The corporate tax rate is 30%

Assume a classical tax system. Express your answers below as a percentage, rounded after 2 decimals. E.g. if your answer is 0.058328, type 5.83%

Required:

A. Calculate the firms cost of equity. (2 marks)

B. Calculate the firms cost of debt. (2 marks)

C. Calculate the firm's after-tax WACC as an effective annual rate. (2 marks)

Type your answers in the text box below, ensuring that you clearly label each of the 3 answers (A, B,C)