Consider Eddie Tower Cable Corp (ETC). The book value of ETCs outstanding bond is $1 million. The bond carries an annual coupon rate of 2%, payable semi-annually, with a maturity of 5 years. Currently, the bond is trading at 80% of face value of $1,000 per unit.ETC stock are selling for $20 per share. A total of 500,000 shares are outstanding. ETC has an equity beta of 1.50. The risk-free rate is 2%, market risk premium is 4%, and tax rate is 40%.

(1) Calculate the cost of equity.

(2) Calculate the before-tax cost of debt.

(3) What is ETCs weighted average cost of capital?