AY (Thls informution is used for problems 20 - 25) The Emvelope Company has the following liabilieles and equity The risk free rate of return is 3.0%. The market rate of return is 9.5%. The Beta is 1.2. The P/E ratio is 7.1. The stock price is $14.80. The last annual dividend was $0.60. This dividend is expected to grow 4.5% per year in the future. There are 255 shares of common stock outstanding. Envelope's tax rate is 25%. The current rate (YTM) on both its short term notes payable and long term bank financing is 5.3%. The book value of Envelope's debt is equal to its market value. The risk premium over Envelope's corporate debt is estimated to be 4%. Calculate the WACC (use the CAPM method for the cost of equity). Calculate the WACC (use the CAPM method for the cost of equity). 7.7% 5.8% 7.1% 8.3% 6.8%