Pinnacle Corp. has 5 million outstanding shares of common stock which has a beta of 1.05. The current market price is $20 per share and the book value per share is $12. It has a bond issue outstanding with a face $50 million which currently trades at a premium price of 110. Its coupon rate is 6.0% and has a yield to maturity of 5.25%.

If you were asked to calculate the weighted cost of capital what market weights would you use?

Group of answer choices

Equity of 64.5% and debt of 35.5%

Equity of 66.7% and debt of 33.3%

Equity of 52.2% and debt of 47.8%

Equity of 54.5% and debt of 45.5%