Use the following information for Questions 26 - 31.

Please calculate a firms WACC (weighted average cost of capital) using the following information:

• The firms ROE is 12% and its Payout Ratio is 40%
• The firm has 9 million shares outstanding, each of which trades at a price of $11. The firm expects to pay a dividend of $1.50 at the end of the year.
• The firm has outstanding debt with a face value of $70 million. These are all 20-year bonds with a 5% coupon (paid semi-annually) and they are selling at a price of $1,352.11 per $1,000 bond.
• The yield on Treasury bills is 2.5%.
• The return on the market is 7%.
• The firms beta is 2.
• The firms tax rate is 30%.

q26.What is the firms growth rate, calculated using ROE and the Payout Ratio?

q27. What is the firms pre-tax cost of debt?

q28. What proportion of the firms capital structure is comprised of debt?

q29.What is the firms cost of equity using CAPM Model?

q30.What is the firms cost of equity using the Dividend Discount Model?

q31.What is the firms WACC (using the CAPM for the cost of equity)?