Key facts and assumptions concerning Kroger Company, at December 12, 2007, appear below. Using this information, answer the questions following.

Facts and Assumptions
Yield to maturity on long-term government bonds	4.54%
Yield to maturity on company long-term bonds	6.32%
Coupon rate on company long-term bonds	7.50%
Market price of risk, or risk premium	6.30%
Estimated company equity beta	1.05
Stock price per share	$ 25.97
Number of shares outstanding	681.2	million
Book value of equity	$ 4,965	million
Book value of interest-bearing debt	$ 6,674	million
Tax rate	35.0%

a.	Estimate Kroger's cost of equity capital.
b.	Estimate Kroger's weighted-average cost of capital. Prepare a spreadsheet or table showing the relevant variables.