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United Parcel Service Inc. was trading at $ 9 7 . 5 3 on December 3 1 , 2 0 1 8 . Its dividend

United Parcel Service Inc. was trading at $97.53 on December 31,2018. Its dividend per share was $3.84, its market beta was estimated to be 1.44, its average pretax borrowing rate was 2.6%, and its assumed statutory tax rate was 22.4%, consisting of the 21% federal rate plus the 1.4% state and local rate, net of any federal benefits.
UPSs market value of equity (market capitalization) was $83.90 billion, computed as 860.2386 million shares times its $97.53 price, and its total market value (enterprise value) was $107.19 billion, computed as $83.90 billion in equity plus the fair value of long-term debt of $23.29 billion (disclosed in note 8 of the financial statements).
Assume a risk-free rate of 2.1% and a market risk premium of 5% to answer the following requirements. Estimate UPSs cost of debt capital, cost of equity capital, and weighted average cost of capital.

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