Thunderhorse Oil. Thunderhorse Oil is a U.S. oil company. Its current cost of debt is 6.90%, and the 10-year U.S. Treasury yield, the proxy for the risk-free rate of interest, is 3.10%. The expected return on the market portfolio is 8.10%. The company's effective tax rate is 30%. Its optimal capital structure is 65% debt and 35% equity. a. If Thunderhorse's beta is estimated at .70, what is Thunderhorse's weighted average cost of capital? b. If Thunderhorse's beta is estimated at .20 , significantly lower because of the continuing profit prospects in the global energy sector, what is Thunderhorse's weighted average cost of capital?