17.6 The overall firm beta for Wild Widgets, Inc., (WWI) is 0.9. WWI has a target debt-equity ratio of 1/2. The expected return on the market is 16 percent, and Treasury bills are currently selling to yield 8 percent. WWI one-year bonds that carry a 7-percent coupon are selling for $972.72. The corporate tax rate is 34 percent.

a. What is WWI’s cost of equity?

b. What is WWI’s cost of debt?

c. What is WWI’s weighted average cost of capital?