You have been asked to calculate a firm's WACC (weighted average cost of capital). The information you have gathered so far includes: The firm's ROE is 10% and its Payout Ratio is 60% (g=ROEx(1-PaoutRatio) The firm has 10 million shares outstanding, each of which trades at a price of $10. The firm expects to pay a dividend of $1.00 at the end of the year. The firm has outstanding debt with a face value of $50 million. These are all 20. year bonds with a 6% coupon rate (paid semi-annually) and they are selling at a price of $802.07 per $1,000 bond. The firm's tax rate is 30%. 1) What is the firm's growth rate? Answer: 2) What is the firm's pre-tax cost of debt? Answer: 7 3) What is the market value of the debt? 8 Answer: 9 20 21 4) What is the market value of the equity? 22 Answer: 25 5) What proportion of the firm's capital structure is comprised of debt? 26 Answer: 27 28 296) What is the firm's cost of equity using the Dividend Discount Model? Answer: 30 31 7) What is the firm's WACC (Please use 1596 for the cost of equity, not your answer from 32 abovey 33 34 35 37