Suppose you have estimated your company's beta to be 2.1, and its dividend growth rate to be 5%. The market risk premium is expected to be 4% and the current risk-free rate 1%. The last dividend your company paid out was 1.50 per share. Your company's current stock price is 41, and with a million shares outstanding, the market value of its equity is 41 million. Your company has bonds outstanding with a market value of 10 million and a yield to maturity of 6%. The corporate tax rate is 20%. Which ONE of the following statements is TRUE? In calculating the WACC, the weight of the cost of equity is 18%. Using the Securities Market Line, the cost of equity is 8.5%. Based on the SML estimate of the cost of equity, your company's (after-tax) weighted average cost of capital is 8.12%. (Tick here if you think that none of the statements is true.) Using the Dividend Growth Model, the cost of equity is 7.5%.