Write the formula for the cost of capital. Explain how you would estimate each component of the cost of capital.

Assume you would like to estimate the cost of debt for XYZ Company. XYZ$$s bond has a semi$-$annual $5\mathrm{.}25\%$ coupon rate and a par value of $$1,000,$ with a market price of $86$ percent of the par. Assume a number of years to maturity that has not been chosen by any other students between $10$ to $50$ years, then estimate the cost of debt for XYZ$.$

Assume the beta of XYZ is $1\mathrm{.}20,$ and the capital structure of XYZ is $70\%$ equity financing and $30\%$ debt financing, and the tax rate is $21\%.$ Estimate the cost of capital for XYZ Company.