You work for a firm that is looking to raise capital in the near future. As part of your work to prepare for potential investors, you determined that you need to compute the WACC of your firm. Your firm is currently structured in such a way that the Debt-to-Equity ratio is 0.4. Assume a tax rate of 30%. Since your company size is comparable with publicly traded micro-cap companies, you started analyzing the Wilshire Micro-Cap ETF, which represents a basket of micro-cap companies in the US. Your firm considers the 3-month Government T-Bills as the risk-free investment.

Cost of Debt:

Your only debt outstanding in the market is a single bond with the following parameters:

• 10 yrs until maturity
• semiannual coupons with an (annual) coupon rate of 7%
• a current market price of 95 (as a percentage of the notional amount)

What is your cost of debt?

Year	Wilshire Micro-Cap ETF	Treasury Bills ETF
2009	$10.85	$89.04
2010	$13.40	$89.04
2011	$15.07	$89.03
2012	$15.61	$88.97
2013	$20.35	$88.93
2014	$24.40	$88.85
2015	$25.41	$88.74
2016	$24.40	$88.79
2017	$30.49	$89.19
2018	$34.38	$90.39