1. Managers of Hardin Motor company have asked you to help them refine their estimate of their cost of capital. What you know is the following:
   1. The liability side of their most recent balance sheet looks like this:
      1. Accounts Payable $213,750
      2. Accrued Expenses $9,680
      3. Short term Bank Loan $10,000
      4. Total Current Liabilities $233,430
      5. Long Term Debt $96,233
      6. Common Stock $50,000
      7. Retained Earnings $247,567
      8. Total Shareholder Equity $297,567
      9. Total Liab. plus Equity $627,230
   2. The Yield to Maturity on Hardins long term debt is 8% with a coupon rate of 6% and maturity of 10 years. Interest expense on the income statement last year was $9,000.
   3. The equity beta for Hardin was 1.5.
   4. The tax rate is 21%.
   5. The risk free rate (10 year Treasury) is 3.5%
   6. The Market Risk Premium is 6.6%.
   7. The ratio of Market Value to Book Value of equity is 3.
   8. Using market value weights, estimate Hardins weighted average cost of capital.