How to solve

Question $8,$ P$9-16($similar to$)$

Points: $3$ of $5$

Part $4$ of $5$

Calculation of individual costs and WACC Carnival Corporation $($CCL$)$ recently sold new bonds at discount price of $$980\mathrm{.}36.$ The bonds have a short $8-$year maturity, have a coupon rate of $13\mathrm{.}00\%,$ and pay interest semi$-$annually. In addition to the $$10\mathrm{.}171$ billion worth of bonds outstanding, Carnival also has $$11\mathrm{.}373$ billion worth of common stock equity outstanding. According to Yahoo! Finance, Carnival's stock has.a beta of $1\mathrm{.}98.$ Currently, the expected return on the market portfolio and risk$-$free rate are, $6\mathrm{.}70\%$ and $0\mathrm{.}48\%,$ 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.

a$.$ The market value weight of long$-$term debt in Carnival's capital structure is $47\mathrm{.}21\%.($Round to two decimal places.$)$

The market value weight of common stock equity in Carnival's capital structure is $52\mathrm{.}79\%.($Round to two decimal places.$)$

b$.$ Carnival's cost of equity using the CAPM is $12\mathrm{.}8\%.($Round to two decimal places.$)$

c$.$ Carnival's before$-$tax cost of debt is $7\%.($Round to two decimal places.$)$