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The total market value of Okefenokee Real Estate Company’sequity is $3 million, and the total value of its debt is $2million. The treasurer estimates that the beta of the stockcurrently is 1.1 and that the expected risk premium on the marketis 10%. The Treasury bill rate is 5%, and investors believe thatOkefenokee's debt is essentialy free of default risk.

a.	What is the required rate of return on Okefenokee stock?(Do not round intermediate calculations. Enter your answeras a whole percent.)

Required rate of return

%

b.	Estimate the WACC assuming a tax rate of 30%. (Do notround intermediate calculations. Enter your answer as a percentrounded to 2 decimal places.)

WACC

%

c.	Estimate the discount rate for an expansion of the company’spresent business. (Do not round intermediate calculations.Enter your answer as a percent rounded to 2 decimalplaces.)

Discount rate

%

d.

Suppose the company wants to diversify into the manufacture ofrose-colored glasses. The beta of optical manufacturers with nodebt outstanding is 1.3. What is the required rate of return onOkefenokee’s new venture? (You should assume that the risky projectwill not enable the firm to issue any additional debt.) (Donot round intermediate calculations. Enter your answer as a wholepercent.)

Required rate of return

%