7. What is the cost of equity?

8. What is the weight of equity in WACC calculations?

9. What is the WACC assuming that the firm as A credit rating?

Please answer question 7, 8, and 9 using the following information: U.S. Treasury Obligations 90-day bills 180-day bills 2-year notes 3-year notes 10-year notes Yield 1.69% 1.68% 2.23% 2.79% 4.46% Other Instruments Discount Notes Certificates of Deposit (3-month) Commercial Paper (6-month) Term Fed Funds Yield 1.70% 1.72% 1.75% 1.78% Corporate Debt Obligations (10- year) AAA AA A BBB BB Yield Coupon Price 5.51% 8.18% 120.103 5.52% 9.85% 132.584 5.70% 0.97% 64.733 6.33% 6.09% 98.239 9.01% 8.41% 96.206 11.97% 4.07% 55.318 B Historical Equity Risk Premiums Geometric mean Arithmetic mean 5.90% 7.50% Tax rate 35% Beta 1.2 Capital Structure Debt/Equity based on book values Debt/Equity based on market values 50% 30% Please answer question 7, 8, and 9 using the following information: U.S. Treasury Obligations 90-day bills 180-day bills 2-year notes 3-year notes 10-year notes Yield 1.69% 1.68% 2.23% 2.79% 4.46% Other Instruments Discount Notes Certificates of Deposit (3-month) Commercial Paper (6-month) Term Fed Funds Yield 1.70% 1.72% 1.75% 1.78% Corporate Debt Obligations (10- year) AAA AA A BBB BB Yield Coupon Price 5.51% 8.18% 120.103 5.52% 9.85% 132.584 5.70% 0.97% 64.733 6.33% 6.09% 98.239 9.01% 8.41% 96.206 11.97% 4.07% 55.318 B Historical Equity Risk Premiums Geometric mean Arithmetic mean 5.90% 7.50% Tax rate 35% Beta 1.2 Capital Structure Debt/Equity based on book values Debt/Equity based on market values 50% 30%