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United Parcel Service, Inc has a market value of equity of $7 billion, and has a total debt of $ 3 billion. United Parcel Service,

United Parcel Service, Inc has a market value of equity of $7 billion, and has a total debt of $ 3 billion. United Parcel Service, Inc assumed statutory tax rate is 35%, its pretax borrowing rate is 4.1% and its estimated market beta is 0.5. Assume also that the expected risk-free rate is 3% and the expected market risk premium is 5%.

a. Estimate United Parcel Service, Inc cost of debt capital

b. Estimate United Parcel Service, Inc cost of equity capital

c. Estimate United Parcel Service, Inc weighted average capital

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