a) (2 points) Your estimate of the market risk premium is 7%. The risk-free rate of return is 4% and IBM has a beta of 1.6. IBM's cost of equity capital is %. (1 decimal place) b) (6 points) Assume Time Warner shares have a market capitalization of $40 billion. The company is expected to pay a dividend of $0.25 per share and each share trades for $40. The growth rate in dividends is expected to be 7% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 9%. Suppose the firm's tax rate is 40% Time Warner's cost of equity is %. (2 decimal places). Time Warner's effective cost of debt is %. (2 decimal places). Time Warner's WACC is %. (2 decimal places)