2. The firm's debt-to-equity ratio is 0.75. If the cost of the firm's stock is 12% and the cost of the firm's debt is 9%, what is the WACC? Assume the tax rate is 21%.

O a. 990%

O b. 10.78%

O c. 8.67%

O d. 11.29%

O e. None of the above

3. The required rate of return on a bond, used in the WACC calculation, is best estimated by calculating the yield to maturity on the firm's existing long-term and short-term debt. Select one: O True O False 4. According to the CAPM, the required rate of return on a stock should equal at least what is offered by a Treasury security plus a compensation for risk, which is measured by the stock's sensitivity to market fluctuations. Select one.

O a. True

O b. False