stock:

4 million outstanding shares

current price $60

shareholder equity 100 million

projected annual dividend (I.e. D1) $2.50

divide by growth 3%

Debt:

200,000 bonds outstanding

current price $1,250

face value $1,000

term to maturity: 6 years

bonds pay an annual coupon rate of 8%. the current risk free rate is 2% while the market portfolio premium is 5.5%. The tax rate facing firm is 21%

1.) What is the cost of equity

2.) what is WACC