After some research you find that the cost of capital you have been given in the previous questions was an arbitrary number someone thought was appropriate and is in fact not based on the fundamentals of the company. As such you take it upon yourself to calculate a more accurate measure. After doing some research you find the following information on the companys capital structure:

1. The company has previously issued two types of bonds:

A. 10000 bonds with a face value of $1000 and a coupon rate of 6% that makes payments every quarter. The current yield is 10% and the bonds have 10 years to maturity.

B. 500 zero coupon bonds with a face value of $10000 that have a 20 years to maturity. They currently have a yield of 12%.

2. The companys beta (systematic risk) is 1.3, the expected return on the market is 7% and the risk free rate is 2%. There are 100000 shares on issue that currently sell for $15.26.

Using this information answer the following questions:

A. Calculate the cost of debt.

B. Calculate the cost of equity.

C. Calculate the WACC.