The Mr. Belvedere Vodka Corporation wants to begin a new line of premium vodka. In order to do so, the company hired a consulting firm at a cost of $200,000 to run a feasibility report. The development of this new brand would require a purchase of a new factory along with heavy distilling equipment at a cost of $18 million. It would also require hiring new management for the life of the project that will cost $500,000 per year. The company predicts that sales will increase by $20 million per year, but at the same time, they also think the new vodka will taste so good that it will cut into sales of its standard vodka line at a cost of $7 million per year. The incremental cost to manufacture the new line of vodka is estimated at $10 million per year. The life of the project is estimated to be 8 years and depreciation is calculated using the straight-line method over the life of the project. The machinery and distilling equipment have a salvage value of $5 million. The level of working capital will need to increase by $2 million dollars in order to support the new line which will be liquidated at the finish of the project. The tax rate for Mr. Belvedere Vodka is 25%. In order to finance the project, the company plans on raising the capital with 40% debt and 60% equity. Mr. Belvedere's Beta is equal to 1.1. The company currently has a 30yr bond with 10 years left until maturity with a coupon rate of 8% paid annually trading at a price of $1,034.32. The company plans on giving a dividend every year and next year's dividend is planned at $5.10 per share. Analysts believe this will grow at a rate of 5% per year. The stock is currently trading at a price of $50 per share. Answer the following questions: Question 1 10/10 points What is the required rate of return on the equity? (Round to the nearest 10th of a percent) Answer: 15.2 Question 2 10/10 points What is the yield of the bond (Round your answer to the nearest 10th of a percent) Answer: 7.5 Question 3 10/10 points What is the Weighted Average Cost of Capital (Round your answer to the nearest 10th of a percent) Answer: 11.4