$($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:

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 $15$ percent on its common stock, the firm's bonds command a yield to maturity of $6$ percent, and the firm faces a tax rate of $27$ 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 $13$ 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?

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

$\%($Round to two decimal places.$)$

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 $13$ percent, what would the firm's cost of capital be $($assuming the cost of debt and tax rate do not change$)?$

$\%($Round to two decimal places.$)$

c$.$ If Crawford acquires the trucking firm, the appropriate cost of capital for evaluating this acquisition is the cost of capital. $($Select from

Data table

$($Click on the following icon in order to copy its contents into a spreadsheet.$)$

$\backslash$table$[[$Cash$,530,000,,],[$Accounts receivable,$4,560,000,,],[$Inventories$,6,600,000,$Long$-$term debt,$ $10,390,000$