1.Each year Briggs & Stratton (producer of gasoline engines) estimates its own company-wide WACC.In 2001, it based its calculation on the following assumptions (info taken from Keown, et al, Financial Management, p. 394):

Risk-free rate is 30-year government bond interest rate from 2001 = 6.1%

Market Risk Premium is historical average difference between equity returns and long term bonds returns = 6%

Equity Beta is estimated by Value Line = 0.83

Cost of debt is yield to maturity on the company's bonds = 7.5%

Tax rate is estimated by the company = 38%

Capital structure is based on target debt to total market value ratio = 23%

Based on Briggs & Stratton's assumptions, what is their required return on assets in 2001?What is their WACC in 2001?Solve for each using both the asset beta approach and by averaging the cost of debt and cost of equity.