A firm has 2.25 million shares of common stock outstanding with a market price of $20 per share. It has 25,000 bonds outstanding, each selling for $1,100. The bonds mature in 12 years, have a coupon rate of 8.5%, and pay coupons annually. The firm expects its next year dividend to be $2.92 and expects it to grow at 3% in perpetuity. The stock price is currently $20. The firms tax rate is 35%. You may assume the bonds have a $1,000 face value each.

a. Solve for the firms market value capital structure (mix of debt and equity).

b. Solve for the firms pre-tax debt cost of capital.

c. Solve for the firms equity cost of capital.

d. Solve for the firms weighted average cost of capital.