GIVEN ABOUT THE MARKET:

T$-$bill return is $3\mathrm{.}8\%$ annually.

The expected annual return on the market portfolio equals $10\%.$

GIVEN ABOUT THE "GAMMA CORPORATION":

Gamma Corporation's capital structure is levered. $($If Gamma Corporation was not levered, its equity Beta would have been $1\mathrm{.}05.)$

Gamma Corporation would like to maintain a target debt$-$to$-$equity ratio of $\mathrm{.}40$ which is its current level.

Gamma Corporation has debt in the form of corporate bonds. The bonds mature in $22$ years, each bond has a $$1,000$ par value, and the coupon rate of $6\mathrm{.}7\%.$ The bonds require that the coupons are made semiannually until the bonds mature. Each bond can be traded for $$1,085$ in today's economy.

Gamma Corporation faces a $25\%$ tax rate on its taxable income.

a$.$ Gamma Corporation's cost of debt $($HINT: "annual yield to maturity"!$)$ is $($Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ Gamma Corporation's cost of equity is $($ Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$.$ Gamma Corporation's WACC is $($TIP: if you are unsure how to use the information on "debt$-$to$-$equity ratio" to calculate "weight of debt" and "weight of equity", you can watch my short video

https:$//$youtu$.$be$/$BAipMtb$6$N$9$k$)$ : $($Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

$\backslash$table$[[,,],[$a$.,$Cost of debt,,$\%$