SuperOnline is a company composed of two divisions: online commerce and fintech. It is planning to spin off its fintech division. Currently, SuperOnline has 10 million shares of stocks trading at $170. It is unlevered. Online commerce divisions EBIT is expected to be 100 million at the end of this year and grow 2% every year. Fintech divisions EBIT is expected to be 50 million at the end of this year and is expected to grow 7% every year. EasyFintech is SuperOnlines fintech business rival and it is only in fintech business. EasyFintechs debt/equity ratio is 25%, its cost of equity is 15%. Assume all debts are riskless. Risk-free rate is 10%. Market Risk premium is 8%. Tax rate is 35%.

(a) What is cost of capital for SuperOnlines fintech division? (4pt) (b) What is the fair value (t=0 value) of SuperOnlines fintech divisions equity? (4pt) (c) What is cost of capital (equity) of SuperOnlines onlince commerce division? (4pt)