Hala Inc. has $16,000,000$ shares of common stock outstanding. The current share price is $$55\mathrm{.}00$ and the book value per share is $$6\mathrm{.}00.$

Hala Inc has two bond issues outstanding.

$$ The first bond issue has a face value of $$165$ million, a $6\mathrm{.}5\%$ coupon rate, sells for $107$ of par and matures in $20$ years.

$$ The second bond issue has a face value of $$75$ million, an $7\mathrm{.}5\%$ coupon rate, sells for $98$ of par and matures in $8$ years.

$$ Each bond issue pays interest semiannually.

Assume the cost of debt is the weighted average of yield to maturity of each issue. The weighting is based on the current market value of the two bonds.

The risk free rate is $2\mathrm{.}50\%$ and the return on the market is $12\%.$

Hala has a tax rate of $40\%$ and a beta of $1\mathrm{.}75.$

QUESTIONS:

a$)$ What are Hala Inc$$s capital structure weights on a book value basis?

b$)$ What are Hala Inc$$s capital structure weights on a market value basis?

c$)$ Which is more relevant, the book or market value weights? Why?

d$)$ What is Hala Inc$$s cost of equity?

e$)$ What is Hala Inc$$s after$-$tax cost of debt?

f$)$ What is Hala Inc$$s cost of capital $($weighted average cost of capital$)?$

g$)$ Hala Inc is an international courier company. It is considering a project using drones to deliver packages. So far, no courier firm has been able to successfully integrate the use of drones into its delivery system. What impact would this project have on the weighted average cost of capital that Hala would use to evaluate the feasibility of this proposed leading$-$edge drone project?