You and your friend have opened a security valuation business. You need to determine the weighted average cost of capital and the value of a client company$$s stock.

Bond Series:

$40,000$ bonds outstanding. Each bond matures in $15$ years, with a par value of $$1000,$ semi$-$annual coupons, with an annual coupon rate $12\%.$ The current yield to maturity $($YTM$)$ on comparable bonds is $9\%.$

The Common Stock:

$1,000,000$ shares of common stock outstanding. Each share is traded at $$24\mathrm{.}61.$

The expected market risk premium $($Rm $$ Rf$)$ is $8\mathrm{.}5\%$ and the risk$-$free rate $($Rf$)$ is $5\%.$ The company$$s equity beta is $1\mathrm{.}0($i$.$e$.,$ this stock has the same amount of systematic risk as the market portfolio$).$ The company$$s marginal tax rate is $34\%.$

a$)$ What is the market value of the company$$s debt liabilities? What is the market value of the company$$s equity?

b$)$ What is the expected return on the company$$s stock?

c$)$ What is the company$$s weighted cost of capital $($WACC$)?$