1. You are estimating the intrinsic value of Home Depot shares. You note that S&P rates Home Depot's long-term debt at A. Using the 10-year Treasury as your benchmark, if single A credit spreads on 11 December are 1.10%, what do estimate to be Home Depot's cost of debt?

2. Home Depot has assets of $44B. It's share price is $260. It has 1 billion shares outstanding. The market value of its debt is $33B. What is the weight of debt in Home Depot's capitalization for purposes of calculating WACC?

3. Assume an equity risk premium of 5.5% and Home Depot has Beta of 1.05 with tax rate of 22%. What is its WACC?