Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current Assets $ 38,000,000 Net, plant, property, and equipment $ 101,000,000 Total assets $ 139,000,000 Liabilities and Equity Accounts payable $ 10,000,000 Accruals $ 9,000,000 Current Liabilities $ 19,000,000 Long-term debt (40,000 bonds, $1,000 par valu $ 40,000,000 Total liabilities $ 59,000,000 Common stock (10,000,000 shares) $ 30,000,000 Retained earnings $ 50,000,000 Total shareholders equity $ 80,000,000 Total liabilities and shareholder's equity $ 139,000,000 The Stock is currently selling $15.25 per share, and its noncallable $1000 par value, 20 year, 7.25% bonds semiannual payments are selling for $875. The beta is 1.25, the yield on a 6-month treasury bill is 3.50% and the yield on a 20-year treasury bond is 5.50%. the required return on the stock market is 11.50% but the market had an average annual return of 14.50% during the past 5 years. The firms tax rate is 40%. 1. What is the best estimate of the tax cost of debt? 2. CAPM 3. WACC