WACC

You have collected the following information about your firm. Its 50 million

shares of common stock have a book value of $1 per share and a current

market price of $42 per share. The stock has a return standard deviation of .25

and beta of 1.10. The expected return for the market portfolio is 8% and the T-

bill rate is 2%. The firm's outstanding bonds have a total face value of $600

million, maturity of 6 years, semi-annual 5% coupon, and a current price of

102% of par value. The marginal tax rate is 40%.

What is the weight of equity?

What is the weight of debt?

What is the cost of equity?

• What is the discount rate used to price the company and evaluate its projects?

What is the cost of debt?