The Finance-is-Fun Company has 10,000 bonds outstanding. The bonds have a face value of $1,000 each. The bonds are selling at 101% of face value, have a 7% coupon rate, pay interest annually, and mature in 9 years. In addition, there are 1.25 million shares of common stock outstanding with a market price of $63 a share and a beta of 0.97. The common stock just paid a dividend of $1.20 and expects to increase those dividends by 3% annually. The firm's marginal tax rate is 35%. The expected return on the market is 11% and the risk-free rate is 3.5%.

1. What is the cost of equity based on the security market line?
2. What weight should be given to debt in the weighted average cost of capital computation?
3. If the cost of debt financing (R_D) is 4.45%, calculate the weighted average cost of capital.
4. No excel please, If necessary add steps to using a financial calculator to find answers for the problem. Thank you.