Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is $53 and the book value per share is $4. The firm also has two bond issues outstanding. The first bond issue has a face value of $70 million and a coupon rate of 7 percent, and sells for 108.3 percent of par. The second issue has a face value of $60 million and a coupon rate of 7.5%, and sells for 108.9 percent of par. The first issue matures in 8 years and the second issue in 27 years.

a. What are Filers capital structure weights on a book value basis?

b. What are Filers capital structure weights on a market value basis?

c. What is the more relevant, the book or market value weights? Why?

d. Assume the stock has a beta of 1.2, there is a market risk premium of 7% and the risk-free rate is 3.1%. Further, assume that the overall cost of debt is the weighted average implied by the two outstanding bond issues. Both bonds make semi-annual payments. The tax rate is 35%. Give this information, what is the companys WACC?