• Determine Target cost of debt: Using information from the firm's website, annual report, the website Investing in Bonds (link available in the Content area), and the library database sources, determine the 'average' rating of your firm's bonds and the current YTM on a composite of these bonds. Based on this information, estimate the current cost of debt for the firm. Explain the approach and procedure you used to make your determination and what this number means.
• Determine Target cost of equity: Determine the required rate of return for your firm using the CAPM. Explain the approach and procedure you used (and justification for the sources of inputs used for your model) to make your determination and the meaning of this required rate of return.
• Determine Target capital structure of the firm: Determine the market value of the firm's debt and equity. Explain the approach and procedure you used and use these values to determine the weights for the WACC.