The Chief Financial Officer (CFO) of the RD Company is interested to identify the value of this company under multiple methods, for example, discounting dividend method using cost of equity or discounting cash flows using WACC. The company has 5 million shares, It has $79 million of debt at an interest rate of 5.0 per cent. The market believes that RD can generate earnings of $14 million before interest and tax in perpetuity, and that RD's beta coefficient is 2.0. RD will pay out its available profits as dividends to its shareholders. Market risk premium is 5.0 per cent and govt bond yields 3.7 per cent. Tax rate is 40 per cent.

1. Calculate cost equity and WACC for RD.