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Cash Flow Inc. stock has a of . 8 5 . and a credit rating of BBB . Currently, BBB rated firms have average credit

Cash Flow Inc. stock has a of .85. and a credit rating of BBB. Currently, BBB rated firms have average credit spreads of 2.75% above a comparable Treasury rate. Assume Cash Flow Inc's debt faces the same yield as an average BBB rated firm. If the risk premium for the market (or rm - rF) is 4.5%, the appropriate Treasury rate (or risk-free rate) is 3.80%, and uses 60% debt financing, estimate the firm's cost of debt, cost of equity, and weighted average cost of capital.

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