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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

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 2.75% 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%. The company's average tax rate is 38%.

  1. What is Wilson's D/E ratio?
  2. Calculate Wilson's WACC.

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