P$9-25$ Calculation of individual costs and WACC BlackRock, Inc. $($BLK$)$ has a capital

structure that consists of common stock equity and debt. The market capitalization

of its equity is $$77\mathrm{.}004$ billion and its debt has a market value of $$4,967$ million.

a$.$ Calculate the market value weights for BLK$\text{'}$s capital structure.

b$.$ Calculate BLK$\text{'}$s cost of equity using a beta of $1,13,$ a risk$-$free rate of $0\mathrm{.}70\%,$

and a market risk premium of $6\%.$

c$.$ Calculate BLK$\text{'}$s cost of debt using a bond price of $$1,071,$ semi$-$annual coupon

payment of $$31\mathrm{.}25,$ and six years to maturity.

d$.$ Calculate BLK$\text{'}$s current WACC using a $21\%$ corporate tax rate.

P$9-26$ ETHICS PROBLEM During the $1990$s$,$ General Electric put together a long string

of consecutive quarters in which the firm managed to meet or beat the earnings

forecasts of Wall Street stock analysts. Some skeptics wondered if GE "managed"

earnings to meet Wall Street's expectations, meaning that GE used accounting gim$-$

micks to conceal the true volatility in its business. How do you think GE's long$-$run

track record of meeting or beating earnings forecasts affected its cost of capital? If

investors learn that GE's performance was achieved largely through accounting gim$-$

micks, how do you think they would respond?