Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $20 per share and has a beta of 0.8. There are 2 million common shares outstanding. The market risk premium is 9%, the risk-free rate is 5%, and the firms tax rate is 40%.

a. What is the market debt-to-value ratio of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. What is Universitys WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

BOOK-VALUE BALANCE SHEET (Figures in millions) Assets Liabilities and Net Worth Bonds, coupon (maturity 10 years, current yield to maturity 8%) $15.0 Preferred stock (par value $20 per share) Common stock (par Additional paid-in stockholders' equity 7%, paid annually Cash and short-term securities Accounts receivable Inventories Plant and equipment 1.0 3.0 0.2 9.8 5.0 $33.0 8.0 20.0 value $0.10) -Retained earnings $33.0 Total Total