1. Describe the components of the WACC. Do all firms use all components? Explain.
2. How is the WACC used by the managers of the firm? What are some of the applications?
3. Determine the weighted average cost of capital for the following scenario and walk-through your analysis.

D'Trois Trucking Corp. recently hired you as a consultant to estimate the companys WACC. You have obtained the following information. (1) The firm's noncallable bonds mature in 10 years, have a(n) 6.00% annual coupon, a par value of $1,000, and a market price of $1,100.00. (2) The companys tax rate is 35%. (3) The risk-free rate is 3.50%, the market risk premium is 6.00%, and the stocks beta is 0.88. (4) The target capital structure consists of 45% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC? Do not round your intermediate calculations.