1)

TAFKAP Industries has 3 million shares of stock outstanding selling at $18 per share, and an issue of $20 million in 8.0 percent annual coupon bonds with a maturity of 20 years, selling at 102 percent of par. Assume TAFKAPs weighted average tax rate is 34 percent and its cost of equity is 13.5 percent.

What is TAFKAPs WACC?

2)

Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 13 percent while its cost of equity is 17 percent. Assume the appropriate weighted-average tax rate is 25 percent.

What will be JBs WACC?

WACC

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