The following information is available for the capital structure of Emerald Group:

Equity: an ordinary share issue, which has just paid a $7.50 dividend per share in the current financial year. The firm is maintaining a constant annual dividend growth of 3%.

Debt: a corporate bond issue that pays 10% annual coupon rate with an annual before-tax yield to maturity of 8.5%. The bond issue has face value of $1,000 and will mature in 30 years.

Required: Complete the following tasks:

Calculate the market value of the Emerald Groups ordinary share if the average return of the shares in the same industry is 12%? (2 marks)

Calculate the market value of the corporate bond for the Emerald Group? (3 marks)

Calculate the total current market value (rounded off to the nearest whole number) and capital structure of the Emerald Group if there are 2,000 bonds and 45,000 shares oustanding (rounded off to two decimal places).(2 marks)

Compute the weighted average cost of capital (WACC) under the classical tax system for the Emerald Group, given the company tax rate is 30% (4 marks)