Saint Nick Enterprises has 16,100 shares of common stock outstanding at a price of $62 per share. The company has two bond issues outstanding. The first issue has 10 years to maturity, a par value of $1,000 per bond, and sells for 95.5 percent of par. The second issue matures in 24 years, has a par value of $2,000 per bond, and sells for 103 percent of par. The total face value of the first issue is $180,000, while the total face value of the second issue is $280,000. What is the capital structure weight of debt?

.1977

.3609

.2878

.3874

.3156

Rossdale Co. stock currently sells for $68.25 per share and has a beta of .85. The market risk premium is 7.10 percent and the risk-free rate is 2.85 percent annually. The company just paid a dividend of $3.45 per share, which it has pledged to increase at an annual rate of 3.10 percent indefinitely. What is your best estimate of the company's cost of equity?

9.26%

6.04%

8.60%

6.46%

7.53%