a. Find WACC given: (show all steps please)

Debt: 10,000 6% coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling at par, quarterly payment.

Comment stock: 500,000 shares outstanding, selling for $25 per share, the beta is 1.2.

Preferred stock: 15,000 shares of 5 percent preferred stock outstanding, currently selling for $93 per share.

Market: 8 percent market risk premium and 4.5 percent risk-free rate.

b. Now adjusts the cost of debt to 6% and its debt-to-equity ratio to 1.5 times. What will be the cost of equity? (There is no tax)