Assume CornerStore has debt with a book (par) value of $41 million, trading at 120% of par value. The firm has book equity of $45 million, and 850 thousand common shares outstanding trading at $96.50 per share. What weights should CornerStore use in calculating its WACC?

a) 33.3% for debt, 66.7% for equity

b) 40.9% for debt, 59.1% for equity

c) 57.2% for debt, 42.8% for equity

d) 43.8% for debt, 56.2% for equity

e) 37.5% for debt, 62.5% for equity

f) 49.3% for debt, 50.7% for equity

An unlevered firm is financed ____________________ .

a) only by amortizing loans

b) by a blend of debt and equity

c) only by zero-coupon bonds

d) only by revolving debt facilities

e) only by equity

f) only by debt