The Pandora Inc. has $200$ million outstanding shares trading at $$25$ per share. The

stock beta is estimated at $\mathrm{.}80.$ Pandora has also $1$ million bonds outstanding with par of

$$1,000.$ The bonds have $20$ years to maturity, $10\%$ coupon rate and currently they trade

at par. Pandora tax rate is $20\%.$ The risk$-$free rate is $3\%,$ while the market risk premium

is $5\mathrm{.}0\%.$

a$.$ Compute Pandora weighted average cost of capital.

b$.$ A recession caused market risk premium to rise to $6\%,$ stock price decline to

$$20$ and bond yield to increase to $12\%.$ Compute the new weighted average cost

of capital?