The Cunningham Company is in the process of determining a return rate to use for its cost of capital.

Upon review of the financial statements it was determined that the total interest bearing debt is \($800,000\) and total stockholders’ equity is \($1,700,000\). In addition, it was determined that the cost of debt financing is 9 percent, and the cost of equity financing is 20 percent.

Required:

a. What proportion of The Cunningham Company’s total financing comes from debt?

b. What proportion of The Cunningham Company’s total financing comes from equity?

c. Calculate The Cunningham Company’s weighted average cost of capital rate.