A manufacturing firm has 60% debt and 40% equity on its balance sheet.

a.) Solve for the firms cost of debt if the company has a 2% probability of default, a Loss Given Default of 55%, the risk-free rate is 2.75% and the firm expects to face a marginal tax rate of 33%.

b.) Solve for the firms cost of equity if the firm has an equity beta of 1.25% and the market risk premium is 5%.

c.) Solve for the firms weighted average cost of capital (WACC)