StarCafe Corporation is reviewing the cost of equity and the WACC it uses to evaluate new investment projects. Management has collected the following information as of September 30, 2001:

Assume that StarCafe is contemplating an investment for the enhancement of its stores: wireless Internet service within each caf. In addition to charging for its use, management believes this enhancement will increase customer traffic and average amount spent per customer. The estimated cost of implementation is $27 million and the expected net increase in annual after-tax cash flow is $3 million in the first year, growing 3% a year in perpetuity. It is believed that this project has a similar risk to the other enhancement projects it carried out since the last 5 years. However if this new project is to be pushed through, additional 2,000 shares of common stock would have to be issued at the current market price.

What is the cost in percentage of common equity using dividend growth rate model? (Use 3 decimal places)

What is the company's WACC? (Use 3 decimal places)

What is the per unit market value in dollars of the company's outstanding bond-debt?

Coupon Interest Rate 12\% @ on Bond-Debt (10 yrs $1000 par to maturity) per unit Tax Rate 40% Long Term Gov't Bond Rate 5% Market Risk Premium 6.9\% Preferred Stock 9% @ \$100 Dividend par Estimated Growth Rate 7% Common Stock Mkt. Value $55/ share New Stock Floatation Cost 12% Coupon Interest Rate 12\% @ on Bond-Debt (10 yrs $1000 par to maturity) per unit Tax Rate 40% Long Term Gov't Bond Rate 5% Market Risk Premium 6.9\% Preferred Stock 9% @ \$100 Dividend par Estimated Growth Rate 7% Common Stock Mkt. Value $55/ share New Stock Floatation Cost 12%