Bassetti Group, a manufacturer of outdoor apparel, is a private company that is based in Pittsburg, Pennsylvania. Its products are distributed across several chain of sporting goods stores on the East Coast and in the Midwest. In the past, the demand for their products and markups have been high, and capital budgeting decisions were based on what managers thought was a good investment. Recently, however, competition from other companies, including the North Face, Eddie Bauer, and Arcteryx, intensified, which led to a need to be more meticulous in their capital budgeting strategy. As a first step, the management decided to calculate the weighted average cost of capital of the company.

To begin, they decided to look at comparable firms to identify some of their financial market data. Two comparable firms they could find are Amer Sports, a conglomerate with brands including Salomon, Wilson, Atomic, Arcteryx, Mavic, Suunto and Precor, and VF Corporation, which owns the North Face, Jansport, and Timberland brands. Both are publicly traded, thus their betas, market-to-book ratios and other financial data are available and provided in the table below.

	Beta	Market-to-Book Equity	Book Debt/Book Equity
Amer Sports	0.98	2.10	0.35
VF Corporation	1.17	4.12	0.50

Bassetti Group currently has two loans outstanding. One is a 20-year loan in the amount of $40M raised 19 years ago at 5% per year interest rate, and the other is a 15-year $30M loan that the company just revolved with a bank. The latter (the 30-million) loan was issued at a 5% interest rate, but currently has yield-to-maturity of 4.2%. The former (the 40-million) loan has the yield-to-maturity of 3.5%. The firm would attempt to revolve the second loan in one year for another 20 years. They anticipate to pay the 5% interest on that as well, but, based on the firms debt rating of BBB, managers expect the yield-to-maturity to be 4.5%.

Currently, the market value of the firms equity is $180M. The U.S. Government interest rates are:

Maturity	Rate
30-year	3%
10-year	2.5%
1-year	2%

Please calculate equity beta, cost of equity, and weighted average costs of capital for the firm. The firm is subject to the effective tax rate of 35%, and its managers believe that a fair assumption for the market risk premium is 5%.

Equity beta: _____________________ Cost of equity: _____________________

WACC: _____________________