Compano Inc. was founded in 1986 in Baytown, Texas. The firm provides oil-field services to the Texas Gulf Coast region, including the leasing of drilling barges. Its balance sheet for year-end 2014 describes a firm with $830, 541,000 in book value assets that has a market value of $1.334 billion.

December 31, 2014

	Balance Sheet (Book Values)	Invested Capital (Market Values)
Liabilities and Owner's Capital
Current liabilities:
Accounts Payable	$8,250,000
Notes Payable	-	-
Other current liabilities	$7,266,000
Total current liabilities	$15,516,000
Long-term debt (8.5% interest paid semiannually, due in 2015)	$420,000,000	$434,091,171
Total liabilities	$435,516,000	$434,091,171
Owner's capital:
Common stock ($1 par value per share	$40,000,000
Paid-in-capital	$100,025,000
Accumulated earnings	$255,000,000
Total owner's capital	$395,025,000	$900,000,000
Total liabilities and owner's capital	$830,541,000	$1,334,091,171

Capital Market Data
Treasury Bond Yield	5.42%
Market Risk Premium	5.00%
Unlevered equity beta	0.90
Stock price	22.50
Market capitalization
Yield on debt	8.00%
Bond beta	0.30
Short-term interest bearing debt
New long-term debt total	-
Tax Rate	40.00%

Question 1. Fill in the boxes for market capitalization and short-term interest bearing debt located under the capital market data.

Step 1: Evaluation the capital structure weights
Enterprise Value = Market Capitalization + Debt
Debt/Enterprise Value
Equity/Enterprise Value

Step 2: Estimate the costs of Financing
Debt (after taxes)
Debt/Equity Ratio
Equity
Levered equity beta

Step 3: Calculate the WACC
WACC