Tempest Manufacturing has 8 million shares of common stock outstanding. The current share price is $73, and the book value per share is $7. Tempest Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $70 million with a 7% coupon that is currently selling for 97% of par. The second issue has a face value of $50 million with an 8% coupon that is yielding 6.375% on an annual basis. The first issue matures in 21 years, and the second in 6 years. Both bonds pay coupons and are compounded semi-annually. Suppose the most recent dividend was $4.10 and the dividend growth rate is 6%. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Assume the par value of each bond is $1,000. Both bonds make semi-annual payments. The tax rate is 35%.

A.Calculate the companys WACC (5 Marks) using MANUAL CALCULATIONS (no excel)

B.Briefly explain the disadvantages of the dividend discount model as a method to estimate the cost of equity (2 Marks)

C.List three methods that could be used to estimate the Beta using Excel. (list)