You are given the task of coming up with a weighted average cost of capital for Mondelez, a maker of food and beverages, and using that cost of capital to do some calculations. Here are some relevant facts: Assume a risk-free rate of return of 3 percent. Assume a market risk premium of 6 percent. You estimate that Mondelez has an equity beta of 0.7. Please assume that Mondelez faces a tax rate of 21 percent. Mondelez has a capital structure that includes both equity ($80 billion) and debt ($20 billion), with no excess cash on the balance sheet. You are welcome to assume that Mondelez has a debt beta of zero, and Mondelez credit profile is consistent with borrowing at a pre-tax rate that is the same as the risk-free rate. (this assumption is not perfectly realistic but I ask you to assume it for purposes of answering this question)

a. What is the after-tax cost of debt?

b. What is the weighted average cost of capital of this business at the leverage of 20 percent?

c. Suppose that the business generated free cash flows of $3.5 billion in the most recent year, and is growing at a stable rate. This value, together with the WACC estimated above and the current value of the companys securities outstanding, imply that growth rate. What is that growth rate? (please answer to the nearest hundredth of a percent)

d. Please use all of the data above to estimate the part of the $100 billion value of Mondelez that comes from the future interest tax shields based on the companys debt policy.