Whirlpool manufactures and sells home appliances under various brand names . IBNI develops and manufactures Computer hardware and offers related technology services . Target operates a chain of general [merchandise discount retail stores . The data in the Following table apply to thesE compartiEs ( dollar amounts in millions ) . For Each Firmly , assume that the market value of the debt Equals its book value. Whirlpool IBM Target Stores Total assets 513. 532 $1 09.524 547, 105 Interest- bearing debt 5 2.597 $ 3.3.925 $ 18, 752 Average pretax borrowing cost 6. 196) 4.396) 4.9 96) Common equity : Book value* 3,006 5 13, 465 5 13, 712 5 Market value 2.959 $7 10.984 5 22, 521 Income tax rate 35. 096 35. 096 35. 096) Market equity beta 2.27 0. 78 7 . 20 REQUIRED a . Assume that the intermediate - term yields on L. S. government Treasury securities are 3. 5 4 /0 . Assume that the market risk premium is 5.09/0 . Compute the cost of Equity capital For Each of the three companies. bo . Compute the weighted- average cost of capital For each of the three companies . C . Compute the unileverEd market ( asset ) beta For Each OF the three companies . `. Assume that Each company is a candidate for a potential leveragEd buyout . The buyers intend to implement a capital structure that has 75%' debt ( with a pre - tax borrowing cost of 8. 0`/0 ) and 250/0 Communion Equity . Project the weighted- average cost of capital for each company based on the new capital Structure* To what extent do these revisEd weighted average costs of capital differ From those computed in Requirement bo