3.- Mellon Inc., has equity with a market value of 50 million and debt with a market value of 10 million. Mellon has bond with a YTD of 4 percent per year, and the expected return on the market portfolio is 10 percent. Mellon has a Beta of 1, and the tax rate is 25%, the company has a huge tax loss carry forward.

a) What is the Debt/asset ratio? What is the Debt-to-Equity ratio?

b) What is the firm's weighted average cost of capital?