You have been asked to calculate the cost of equity for three firms- Eastern, Western, and Northern. You know the following:

You know the following:

10-year Treasury yield = 2.20% Market Premium = 5.5% Average Tax Rate = 21%

What are the expected returns on equity and WACCs for each of these firms?

IMPORTANT: SHOW FORMULAS USED TO CALCULATE

Firm Beta Cost of Debt Debt/Assets Eastern 1.30 3.2% 45% Western 0.80 4.0% 35% Northern 2.15 4.9% 75% A B E 1 C D Cost of Equity Beta Market Premium 2 RE Equity Cost 3 Eastern 4 Western 5 Northern 6 7 Cost of Debt 8 R. Debt/Assets 9 Eastern 10 Western 11 Northern 12 13 Weighed Average Cost of Capital WACC 14 15 Eastern 16 Western 17 Northern 18 19 Tax rate 21.0%