The cost of debt (10 percent), the cost of equity (15 percent), the tax rate (50 percent), and annual earnings after taxes ($10,000) are the same for a domestic firm and a multinational company. The firm’s target debt ratio (optimum capital structure) is 20 percent, while the company’s target debt ratio is 50 percent.

(a) Determine the weighted average costs of capital for these two enterprises.

(b) Determine the market values of the two enterprises.