XYZ Inc. is trying to determine its optimal capital structure. Presently, the company has a capital structure that consists of 100% common equity. The risk-free rate is 3% and the market risk premium is 8%. XYZ's stock has a beta of 1.5. The company's tax rate is 40%. (a) Under the current capital structure, what is the company's weighted average cost of capital (WACC)? (2 marks) (b) The company decides to change its capital structure by issuing a 20-year bond that makes annual coupon payments. The bond currently sells for $800 with an 8% coupon rate and a par value of $1,000. After the bond issuance, the company has a new capital structure of 40% debt and 60% common equity. What is the company's WACC under the new capital structure? (8 marks)