Zonk Corp.

The following data pertains to Zonk Corp., a manufacturer of ball bearings (dollar amounts in millions):

Total assets	$7460
Interest-bearing debt	$3652
Average pre-tax borrowing cost	10.5%
Common equity:
Book value	$2950
Market value	$13685
Income tax rate	35%
Market equity beta	1.13

1. Assuming that riskless rate is 4.6% and the market premium is 7.3%, calculate Zonks cost of equity capital.

2.Determine the weight on debt capital that should be used to calculate Zonks weighted-average cost of capital:

3.Determine the weight on equity capital that should be used to calculate Zonks weighted-average cost of capital:

4.Using the above information, calculate Zonks weighted-average cost of capital