The company "XYZ" had disappointing results recently, which has caused uncertainty among its shareholders and the possibility of a comprehensive restructuring for next year (2019) is under consideration. As part of this restructuring it is considered selling the "XYZ" division, which this year (2018) had earnings before interest and taxes (EBIT, Earnings before Interests and Taxes) of $560 million pesos. The growth rate of these earnings is expected to be 6% between 2019 and 2023 and 4% after that. For the current year, capital expenditures amounted to $420 million pesos in the "XYZ" division and depreciation was $350 million pesos. These two items are expected to grow at 4% per year until the year 2023. The Free Cash Flow of the company is expected to grow at a rate of 2% in perpetuity from the year 2024. Working capital requirements are trivial so it is not necessary to consider them.

It is estimated that the Beta of competing companies of the "XYZ" division is 1.2. The proportion of debt with respect to the enterprise value of the "XYZ" division is only 20%. The debt-capital ratio (D/E) of competing companies is the same as the one of the "XYZ" division. The "XYX" division expects to pay interest of 10% annual on its debt (before considering the payment of taxes). The risk-free rate is 7% annual, the market risk premium is 6.5% and the tax rate is 40%.

(a) Calculate the weighted average cost of capital (rWACC) of the "XYZ" division.

(b) Calculate the enterprise value of the "XYZ" division at the beginning of 2019.