WACC

David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 12%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.94%. What is the company's cost of equity capital? Round your answer to two decimal places.

Bond Yield and After-Tax Cost of Debt

A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $702.19. The company's federal-plus-state tax rate is 40%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places.