Eagle Construction Co. is a successful privately-held firm owned firm by Marquette alumni.

-It has $200 million bonds outstanding due in ten years with a 5% coupon paid semi-annually.

-They are valued at 90% of par value.

-The company also has 25 million shares of common stock outstanding among the partners. The stock book value is $2/share and is valued at $10/share.

-A survey of publicly-held firms in their industry estimates a beta of 1.3.

-The risk-free rate is 4% and the market equity return is 13%. Analysts suggest an additional 3% premium due to their small size

-Eagles tax rate is 20%.

Step One: Calculate the (pre-tax) yield-to-maturity of the bonds __________

Calculate the (after-tax) yield-to-maturity of the bonds __________

Step Two: Calculate the equity cost ___________

Step Three: Calculate the debt and equity mix (%) Debt ________ Equity ________

Step Four: Calculate the WACC __________