The market value of NPU Ice Creamery equity is $$8$ million and the market value

of its debt is $$6$ million, with book value of debt at $$2$ million and book value of

equity at $$2\mathrm{.}5$ million. The CFO estimates that the beta of the stock current is $1\mathrm{.}43$

and that the expected risk premium on the market is $8\%.$ The Treasury bill rate is

$3\%.$ The coupon rate on the company$$s debt is $5\%$ and the Yield to Maturity is

$5\mathrm{.}5\%.$

Requirements:

a$)$ What is the required rate of return on NPU Ice Creamery stock?

b$)$ Estimate the Weighted Average Cost of Capital, assume a $40\%$ tax rate.