Ramblin Wreck is a firm specializing in engineering components. The firm is publicly traded and is considering the following project: The project will last 5.00 years with an annual cash flow of $40.00 million. The project will require an initial investment of $140.00 million The firm must determine the cost of capital to evaluate the project. (The project is within the firms normal activities) Ramblin Wreck, Inc. Financial Data:

STOCK DATA: BOND DATA:

Current Price Per Share $28.00 Current Price Per Bond $937.00

# of Shares 2.00 million # of bonds 20,000.00

Book Value $50 million Annual Coupon Rate 8.00%

Face Value Per Bond $1,000

Maturity 10 years

The risk free rate in the economy is currently 2.00%, while investors have a market risk premium of 8.00%. Ramblin Wreck, Inc. has a beta of 1.49. The tax rate is 38.00%. What is the weight in debt for the project?