You have been asked to evaluate the quality of investments at Megapolis Inc., a firm that operates in two businesses cement and steel. You have been provided the following information on the businesses:

	Market value of assets (in millions)	Unlevered beta of business
Cement	1 000	1.40
Steel	2 000	0.75
Total	3 000

The firm has 200 million shares, trading at $10 a share and faces a marginal tax rate of 40%. The companys bonds have an A rating and a default spread (over risk free rate) of 3%. The risk-free rate is 2% and the equity risk premium is 5%.

Estimate:

a. Market value of equity (E) and market value of debt (D)

b. Unlevered beta for the total firm (can be found as a weighted average) and then levered beta for the firm

c. Cost of equity and debt

d. Cost of capital (WACC)