The Fresno Eagle Company (FEC) bond carries a coupon rate of 4% with semi-annual payments, a $1,000 par, and a maturity of 15 years. The current price of the bonds is $1050. The firms average tax rate is 35%.

10-Year Treasury bond currently yields 2% and the expected market return is 8%. The market risk premium is 6%. FECs beta is 1.25.

FEC capital structure is as follows:

Bonds (2,000 bonds outstanding) with market value of $2,000,000

Common stock (600,000 shares) with market value of $6,000,000

Round the answers to 4 decimal places, e.g., 0.0987 instead of a percentage.

Use the same information above. What is its after-tax cost of bonds (debts)?

Use the same information above. Please use CAPM model to calculate FECs cost of common stock?

Use the same information above. Based on your calculation on FECs cost of debts and common stocks, what is FECs WACC (weighted average cost of capital)?