Shares of the Pacific Electric Corporation have an estimated beta of 1.10. PEC funds its assets with 50 percent debt at an average after-tax cost of debt of 6 percent. The excess return on the market portfolio is 5 percent and the risk-free-rate is 3 percent.

a. What is Pacific Electric Corporation's estimated cost of equity according to the CAPM?

B. What is Pacific Electric Corporation's weighted average cost of capital?