1. A company's executive team is trying to establish the RRR they intend to use to evaluate projects they're thinking of investing in. They have two bond issues outstanding: One with a coupon rate of 5.5% and another with a coupon rate of 6.5%; both have YTMs of 7.0%. No bank loans are listed on their SFP. Their equity, entirely composed of common stock, currently provides a return of 9.5%. If the company's debt ratio is .40, what should they use as their RRR