The total market value of the common stock of Company Z is $6 million, and the total market value of its debt is $4 million. (Assume the total market value of its debt is available in this case.) The treasurer estimates that the beta of the stock is currently 1.2 and that the equity risk premium is 6%. The Treasury note (T/N) rate is 4%. Assume that Company As debt cost is 3% above T/N rate and the company's tax rate is 40%. The T/N rate is treated as the risk-free rate.

Questions a) What is the required return (cost of equity) on Company A's stock? b) Estimate the WACC of Company A.