Please answer all questions clearly, and show your work.

1. Solaris Corp.s common stock has a beta of 2. The risk-free rate is 3%, and the expected market return is 10.4%. Calculate the firms cost of common stock, k_cs.

2. Solaris stock price is $20 per share, and there are 40 million shares outstanding. Calculate the firms market value of common stock. (2 points)

3. Solaris bonds have a coupon rate of 12%, paid semi-annually. The bonds mature in 10 years, have a face value of $1,000, and a price of $940. Calculate the firms cost of debt, k_b.

4. The firms tax rate is 40%, and the market value of debt is $600 million. Given this and the information in parts 1-3, calculate the firms weighted average cost of capital.