Cost of Capital Now: Suppose the cost of debt is 8.50% (before tax) The tax rate is .45 D_0 = $2.95 g = 3.05% Beta = 1.70 r_w = 2.25% RP_m = 5.50% (Market Risk Premium) Flotation costs (F) = 5% of issue price The debt is trading at $998.25. with 7,676 bonds outstanding. The firm has 225,000 shares of common stock outstanding, which are trading at $37.95/share (P_0). Given the above information, what is the Market value of the firm's debt? $ Given the above information, what is the Market value of the firm's equity? $ Now calculate the weight of debt for the firm (W_d). You will use this to calculate the WACC. Now calculate the weight of equity for the firm (W_ce). You will use this to calculate the WACC. What is (calculate) the cost of existing common equity (retained earnings)? (Briefly describe your approach/method as well as your answer) What is (calculate) the firm's Weight Average Cost of Capital (WACC)? (Briefly describe your approach/method as well as your answer)