You pay tax at the rate of 25%. The corporate tax rate is 30%. You own 8,000 shares of Raymond Corp and receive a fully-franked dividend of 35 cents per share

1. How much additional personal tax (beyond the tax already paid on your behalf at the corporate level) will you have to pay on this dividend?
2. Raymond Corp is financed by 45% debt and 55% equity. The return demanded by the firms bond holders is 5% p.a. and shareholders in this type of firm demand a return of 13.5% p.a. The corporate tax rate is 30%. You estimate that = 0.55 for this firm. What is the firms weighted average cost of capital? Incorporate all tax effects into the WACC
3. Briefly discuss agency costs in the context of payout policy