The following capital structure information is available for Walmart Inc.

Walmart Inc. has a target capital structure of 40% debt and 60% equity.

Six years ago, the company issued 10,000 10-year bonds which pay a 5% coupon rate (annual payout) for $859.53. The bonds mature in 4 years. The current market rate for bonds with the same term and risk characteristics is 7%. The market price of the bonds currently is $932.27.

The companys beta is 1.25.

The risk free rate is 2.75% and the market risk premium is 5.5%.

The company is a constant growth firm that paid an annual dividend last year of $1.30. The dividend has an expected growth rate of 3%.

The market price of the stock is $20.00 per share.

The company has 500,000 shares outstanding.

The companys marginal tax rate is 25%.

Required:

1. Calculate Walmarts cost of debt used in calculating its weighted average cost of capital
2. If Walmart using capital asset pricing model approach (CAPM) what would be its cost of Equity
3. If Walmart using the dividend growth model approach what would be its cost of Equity
4. What would be Walmarts current weighted average cost of capital (using the dividend growth model for the cost of equity)