Over the last twenty years, there has been considerable consolidation in the confectionary business (e.g., the acquisition of Rowntree PLC by Nestle SA in 1988 and Cadbury by Kraft in 2010). You have a suspicion that a large food manufacturer might try to buy Tootsie Roll. You want to calculate a DCF valuation for Tootsie Roll. The first step in your valuation is to calculate Tootsie Roll's weighted average cost of capital. Use the data provided below to answer the questions that follow. Round all answers to two decimal places.

• Therisk-free rate is 4.75%.
• The expected return on the market portfolio is 8%.
• The corporate tax rate is 30%.
• The face value of TootsieRoll's outstanding bonds is $2,300 million.
• The coupon rate on TootsieRoll's bonds is 4.5%. Assume that the bonds pay annual coupons.
• The yield to maturity on TootsieRoll's bonds is 6%.
• TootsieRoll's bonds mature in 11 years.
• Tootsie Roll has 1,600 million common shares outstanding.
• The market price of TootsieRoll's common shares is $6.10.
• TootsieRoll's Beta is 0.7

a. What is TootsieRoll's after-tax cost ofdebt? %

b.What is TootsieRoll's cost ofequity? %

c.What is the market value oflong-term debt? $ million

d.What is the capital structure weight forequity? %

e.What is TootsieRoll's WACC? %