Use the following information to answer next three questions. Rollins Corporation is examining its cost of capital. The company has two sources of long-term fund: long- term debt (bond) and common equity. Debt information: Its bonds have a 5 percent coupon, paid annually, with a maturity of 16 years, and are currently selling for $1,089. Par value is $1,000. The corporate tax rate is 35%. Equity information: Rollins' beta is 0.95, the risk-free rate is 4 percent, and the market rate of return is 8 percent. Rollins is a constant dividend growth firm which is expected to pay a dividend of $1.12, sells for $22.00 per share, and has a dividend growth rate of 3 percent 1. What is Rollins' after-tax cost of debt? A) 3.97% C) 4.81% B) 2.75% D) 4.96% Rollins Corporation is examining its cost of capital. The company has two sources of long-term fund: long- term debt (bond) and common equity. Debt information: Its bonds have a 5 percent coupon, paid annually, with a maturity of 16 years, and are currently selling for $1,089. Par value is $1,000. The corporate tax rate is 35%. Equity information: Rollins' beta is 0.95, the risk-free rate is 4 percent, and the market rate of return is 8 percent. Rollins is a constant dividend growth firm which is expected to pay a dividend of $1.12, sells for $22.00 per share, and has a dividend growth rate of 3 percent 2. What is Rollins' cost of equity capital using SML approach and dividend growth model? A) 7.8%, 8.1% C) 9.1%, 79% B) 7.8%, 9.1% D) 9.1%, 8.4% Rollins Corporation is examining its cost of capital. The company has two sources of long-term fund: long- term debt (bond) and common equity. Debt information: Its bonds have a 5 percent coupon, paid annually, with a maturity of 16 years, and are currently selling for $1,089. Par value is $1,000. The corporate tax rate is 35%. Equity information: Rollins' beta is 0.95, the risk-free rate is 4 percent, and the market rate of return is 8 percent . Rollins is a constant dividend growth firm which is expected to pay a dividend of $1.12, sells for $22.00 per share, and has a dividend growth rate of 3 percent 3. What is Rollins' weighted average cost of capital (WACC) given that the capital structure of Rollins's is 45% debt and 55% equity? (Use cost of equity from dividend growth model) A) 7.34% C) 5.69% B) 7.12% D) 6.94%