The company "Hermes S$.$A$."$ plans to produce a new product. The CEO estimates that the cash flows and the initial cost required for the implementation of the investment plan amount to $5,000,000.$ The company plans to finance the investment plan by issuing bonds worth $2,000,000,$ obtaining a bank loan of $1,000,000,$ and covering the remainder with retained earnings.

Additionally, the following information is given regarding the financing structure of the project:

For equity financing, it is stated that the current share price of Hermes S$.$A$.$ is $8\mathrm{.}5.$ The company has just paid a dividend of $1$ per share, and the annual dividend growth rate is a constant $2\%,$ which is estimated to remain at this level for the next period.

For foreign capital, the following data is provided:

o The bank loan will have a duration of $10$ years and will be repaid in $10$ equal annual principal and interest payments. The annual interest rate of the loan is estimated to be $12\%.$

o The bonds issued by the company also have a duration of $10$ years and an issuance interest rate of $4\%.$ The nominal value of the bonds is $1,000,$ while their market value is $789\mathrm{.}29.$

Using the above information, calculate:

A$.$ The cost of equity $($ke$).$

B$.$ The cost of the bank loan after taxes $($kd$).$

C$.$ The cost of the bond loan after taxes $($y$).$

D$.$ The weighted average cost of capital $($WACC$).$

Assumptions:

The new investment has the same risk level as any other investment already undertaken by Hermes S$.$A$.$

Hermes S$.$A$.$ uses the same capital structure percentages in all its investments, and therefore the company's capital structure remains stable across all its activities.

The corporate tax rate is $20\%.$

There are no flotation costs for any source of capital.