You are employed by Good Value as an assistant to the CFO. Your boss has asked you to estimate the weighted average cost of capital for the company. The balance sheet and some other information about Good Value follows below.

Assets
Current assets	$ 38,000,000
Net plant, property, and equipment	101,000,000
Total assets	$139,000,000
Liabilities and equity
Accounts payable	$ 10,000,000
Accruals	9,000,000
Current liabilities	$ 19,000,000
Long term debt (40,000 bonds, $1,000 par value)	40,000,000
Total liabilities	59,000,000
Common stock (10,000,000 shares)	30,000,000
Retained earnings	50,000,000
Total shareholders equity	80,000,000
Total liabilities and shareholders equity	$139,000,000

Good Value stock is currently selling for $7.50 per share and that Good Value bonds are selling for $875.00 per bond. The bonds have a $1,000 par value, a 7.25% annual coupon rate, semiannual payments, are not callable, and a 20-year maturity. Good Value's beta is 1.25, the yield on a 6-month Treasury bill is 3.5%, and the yield on a 20-year Treasury bond is 5.5%. The expected return on the stock market is 11.5%, but the market has had an average annual return of 14.5% during the past 5 years. Good Value is in the 40% tax bracket. a) What is the best estimate of the after-tax cost of debt for Good Value? [Ans. 5.14%] Explain b) Using the CAPM approach, what is the best estimate of the cost of equity for Good Value? [Ans. 13.00%] Explain c) What is the best estimate for the weights to be used when calculating the WACC? [Ans. Ws = 68.2% Wd = 31.8%] Explain d) What is the best estimate of the WACC for Good Value? [Ans. 10.50%] Explain