Question 3: Global Corp. has debt with a market value of $80,000 and common equity with a market value of $120,000. The US tax rate is 35 percent. It has issued a bond with 8 percent coupon rate, 1,000 par value outstanding, and 20 years to maturity. The bond is priced at $956 now. The riskless rate of interest is 6 percent, the expected rate of return on a market portfolio is 8 percent, and the beta coefficient of a common stock is 1.2. What is the weighted average cost of capital for Global Corp.?

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