The Inter Inc. has 10 million outstanding shares trading at $25 per share. The stock beta is estimated at 1.50. Inter has also 150,000 bonds outstanding with par of $1,000. The bonds have 18 years to maturity, 8% coupon rate and currently they trade at par. Inter tax rate is 40%. The risk-free rate is 2%, while the market risk premium is 4.0%. a. Compute Inter Inc. weighted average cost of capital. b. A recession caused the stock price decline to $20 and bond yield to increase to 10%. Compute the new weighted average cost of capital?