Transcribed Image Text
If Wild Widgets, Inc., were an all-equity company, it would havea beta of 1.15. The company has a target debt-equity ratio of .50.The expected return on the market portfolio is 12 percent andTreasury bills currently yield 3.1 percent. The company has onebond issue outstanding that matures in 24 years, a par value of$2,000, and a coupon rate of 5.8 percent. The bond currently sellsfor $2,150. The corporate tax rate is 22 percent. a.What is the company’s cost of debt? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)b.What is the company’s cost of equity? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)c.What is the company’s weighted average cost of capital?(Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.)