Collins Group

The Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital, The balance sheet and iome other information are provided below:

Assets

Current assets

Net plant, property, and equipment

Total assets

$$38,000,000$

$101,000,000$

$$139,000,000$

Liabilities and Equity.

Accounts payable

$ $10,000,000$

Accruals

Current liabilities

Long$-$term debt $(40,000$ bonds, $$1,000$ par value$)$

Total liabilities

Common stock shares$)$

Retained earnings

Total shareholders' equity

Total liabilities and shareholders' equity

$9,000,000$

$$19,000,000$

$40,000,000$

$$59,000,000$

$30,000,000$

$50,000,000$

$80,000,000$

$$139,000,000$

The stock is currently selling for $$15,25$ per share, and its noncallable $$1,000$ par valuc, $20-$yerr, $7,25\%$ bonds with seminumal payments are selling for $$875\mathrm{.}00.$ The beta is $1\mathrm{.}25$ the yield on a $6-$month Treasury bill is $3\mathrm{.}50\%$ and the yield on a $20-$year Treasuy bond is $5\mathrm{.}50\%.$ The required return on the stock market is $11\mathrm{.}50\%,$ but the market bas had an average annual return of $14\mathrm{.}50\%$ during the past $5y$ cars. The fim's tax rate is $25\%.$