1. What is the cost of debt?

2. What is the cost of equity? (using the CAPM)

Putting All the Pieces Together - WACC Example Equity Information: Debt Information: 50 million shares $1 billion in outstanding debt (face value) $80 per share Current quote = 110 Beta = 1.15 Market risk premium Coupon rate = 9%, semiannual coupons = 9% 15 years to maturity Risk-free rate = 5% The firm's tax rate is 40%