Wilson Inc. uses bonds and common shares to finance its investments and operations. The firm's debt consists of 20,000 bonds that are currently trading at a price of $1038.75 each and yielding a 275 basis point spread above federal government debt of the same maturity. Wilson's 500,000 common shares are currently trading at a price of $48.85 each. The firm just paid a dividend of $3.20 per share and it expects the dividend to grow by five percent per year for the foreseeable future. The risk free rate of interest is currently 2.95% and the market risk premium is estimated to be 6.45%. Wilson's investment bankers inform them that bonds with the same yield can be marketed for 1.4% of the proceeds (floatation costs) while issuing new common stocks would incur a 6% financing wedge. The company's average tax rate is 38%. a) What is Wilson's D/E ratio? b) Assuming the firm has no free cash flow or marketable securities available for re-investment in a new project, calculate Wilson's WACC