Calculation of individual costs and WACC Carnival Corporation (CCL) recently sold new bonds at discount price of

$951.88. The bonds have a short 3-year maturity, have a coupon rate of 11.50%, and pay interest semi-annually. In addition to the $10.103 billion worth of bonds outstanding, Carnival also has $11.745

billion worth of common stock equity outstanding. According to Yahoo! Finance, Carnival's stock has a beta of 1.74. Currently, the expected return on the market portfolio and risk-free rate are, 6.70% and 0.53%, respectively.

a.Calculate the market value weights for Carnival's capital structure.

b.Calculate Carnival's cost of equity using the CAPM.

c.Calculate Carnival's before-tax cost of debt.

d.Calculate Carnival's current WACC using a 21% corporate tax rate.