Carnival Corporation (CCL) recently sold new bonds at a discount price of $990. The bonds have a short three-year maturity, have an 11.5% coupon rate, and pay interest semi-annually. In addition to the $10.913 billion worth of bonds outstanding, Carnival also has $11.014 billion worth of common stock equity outstanding. Carnival’s stock has a beta of 1.96. Currently the expected return on the market portfolio and the risk-free rate are 6.8% and 0.38%, respectively.

a. Calculate the market value weights for Carnival’s capital structure.

b. Calculate Carnival’s cost of equity using the CAPM.

c. Calculate Carnival’s before-tax cost of debt.

d. Calculate Carnival’s current WACC using a 21% corporate tax rate.