16. You are working for a mid-sized company that is looking to estimate its cost of debt. The company has never had an issuance in the bond market. What would be the best proxy to estimate its cost of debt? a. Cost of debt from companies of a similar market capitalization b. Cost of its bank debt c. Cost of debt in the corporate bond market d. Cost of its equity 17. For an unlevered firm, the cost of capital can be determined by using the 2. Yield to maturity on the traded debt b. Capital Asset Pricing Model c. Dividend yield d. Preferred stock yield 18. Assume Bismuth Electronics has a book value of $6 billion of equity and a face value of $19.7 billion of debt. The market values of equity and debt are $2.5 billion and $185 billion. A Wall Street financial analyst determines values of cquity and debt us $3 billion and $20 billion. Which of the following values should be used for calculating the firm's WACC? 1. 56 billion of equity and $19.7 billion of debt b. 52.5 billion of equity and $20 billion of debt c. $3 billion of equity and $20 billion of debt d. $2.5 billion of equity and $18.5 billion of debt 19. Your estimate of the market risk premiurn is 6%. The risk-free rute of return is 4% and General Motors has a beta of 1.4. What is General Motots' cost of equity capital 2. 11.2% b. 13.0% c. 11.8% d. 12.4%