Your firm is thinking of opening a new big$-$box retail division. Your boss has asked you to analyze Wal$-$Mart to help estimate the cost of capital for such an endeavor. Wal$-$Mart has a $31\%$ marginal tax rate.

$($a$)$ Suppose that Walmart$$s Blume$-$adjusted beta is $0\mathrm{.}5293.$ Explain in words what this beta mean.

$($b$)$ Suppose Walmart$$s debt$-$to$-$enterprise$-$value ratio is $16\mathrm{.}38\%.$ If we assume that WalMart follows a fixed debt$-$to$-$value policy and that its debt and cash ha a zero beta, then what is Walmart$$s unlevered enterprise beta?

$($c$)$ For the purposes of evaluating the cost of capital for a potential project, explain in words why is it better to calculate Wal$-$Mart$$s unlevered enterprise value beta rather than its unlevered beta $($that includes cash$)?$

$($d$)$ What is the unlevered $10-$year nominal cost of capital for your new big$-$box retail company, if the current $10$ year Treasury yield is $2\mathrm{.}94\%?$ You may compute the historical risk premium for the $$Estimating the equity premium$$ slide of the CAPM and Discounting lecture. Explain your steps.