b. If the total market value of Coral Gables fancy, of 35 percent debt and 65 percent equity (this is CFO estimates the market values to be) and the of its debt is 5.45 percent, what is the beta for Coral using your estimated beta and the information in the problem, 13.37 Estimate the weighted average cost of capital for Con ment in Problem 13.36. Assume that the average and made rates for Coral Gables are both 25 percent. using regression analysis. However, you have found a company with pub- 13-32 CHAPTER 13 The Cost of Capital common stock? licly traded stock that has operations exactly like those at Coral Gables. Using stock returns for this pure-play comparable firm, you estimate the beta for the comparable company's stock to be 1.06. The market value of that company's common equity is $45 million, and it has one debt issue outstanding with a market value of $15 million and an annual pretax cost of 4.85 percent. The comparable company has no preferred stock. a. If the risk-free rate is 2.88 percent and the market risk premium is 5.92 percent, what is the beta of the assets of the comparable company