Assume Apple has $10$ million shares outstanding and a current share price of $$40$ per share. It also has long$-$term debt outstanding. This debt is risk$-$free, is four years away from maturity, has annual coupons with a coupon rate of $10\%,$ and has a $$100$ million face value. The first of the remaining coupon payments will be due in exactly one year. The riskless interest rates for all maturities are constant at $6\%.$ Apple has EBIT of $$88$ million, which is expected to remain constant each year. New capital expenditures are expected to equal depreciation and equal $$13$ million per year, while no changes to net working capital are

expected in the future. The corporate tax rate is $25\%,$ and Apple is expected to keep its debt$-$equity ratio constant in the future $($by either issuing additional new debt or buying back some debt as time goes on$).$

a$.$ Based on this information, estimate Apple$$s WACC.

b$.$ What is Apple$$s equity cost of capital?