$($Weighted average cost of capital$)$ Crawford Enterprises is a publicly held company located in$$ Arnold, Kansas. The firm began as a small tool and die shop but grew over its$35-$year life to become a leading supplier of metal fabrication equipment used in the farm tractor industry. At the close of$2019,$ the$$ firm's balance sheet appeared as$$ follows: LOADING....

At present the$$ firm's common stock is selling for a price equal to its book$$ value, and the$$ firm's bonds are selling at par.$$ Crawford's managers estimate that the market requires a return of $18$ percent on its common$$ stock, the$$ firm's bonds command a yield to maturity of $9$percent$,$ and the firm faces a tax rate of $24$ percent.

a$.$ What is$$ Crawford's weighted average cost of$$ capital?

b$.$ If$$ Crawford's stock price were to rise such that it sold at $1\mathrm{.}5$ times book$$ value, causing the cost of equity to fall to $16$percent$,$ what would the$$ firm's cost of capital be$($assuming the cost of debt and tax rate do not$$ change$)?$

c$.$ Crawford is considering a new business opportunity involving the acquisition of a trucking firm. What do you think the firm should do to select an appropriate cost of capital for evaluating this$$ acquisition?