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Barrock Mining Corporation has 4 . 5 million shares of common stock outstanding and 7 5 , 0 0 0 9 . 5 % annual

Barrock Mining Corporation has 4.5 million shares of common stock outstanding and 75,0009.5% annual
coupon bonds outstanding, par value $1,000 each. The common stock currently sells for $27 and has a beta
of 1.3. The bonds have 20 years to maturity and sell for 112% of par. The market risk premium is 8%,
Treasury bills yield 3%, and the firms tax rate is 40%.
3. What is the weight of equity in the firm?
A)61.83%
B)59.12%
C)38.17%
D)40.88%
E)48.39%
4. Pretend this firm is financed with a debt-to-equity ratio of 1. What would be the firms WACC?
A)10.54%
B)8.40%
C)8.11%
D)11.38%
E)9.18.
Please do not use excel to this problems. for question #4 : Make sure to find the right answer for cost of debt using the given bond and coupon price in order to look for WACC. Please do not assume the cost of debt as other expert calculated previously. I would like to get the right % for cost of debt. Thank you.

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