Question: Please answer question 6, 7, and 8 using the following information U.S. Treasury Obligations 90-day bills 180-day bills Yield 1.69% 1.68% 2-year notes 3-year

Please answer question 6, 7, and 8 using the following information U.S.

Please answer question 6, 7, and 8 using the following information U.S. Treasury Obligations 90-day bills 180-day bills Yield 1.69% 1.68% 2-year notes 3-year notes 10-year notes 2.23% 2.79% 4.46% Other Instruments Yield Discount Notes 1.70% Certificates of Deposit (3-month) 1.72% Commercial Paper (6-month) 1.75% Term Fed Funds 1.78% Corporate Debt Obligations (10- Coupo year) Yield Price 120.10 AAA 5.51% 8.18% 3 AA 5.52% 9.85% 132.58 4 A BBB BB B Historical Equity Risk Premiums Geometric mean Arithmetic mean Tax rate Beta Capital Structure 5.70% 0.97% 64.733 6.33% 6.09% 98.239 9.01% 8.41% 96.206 11.97 % 4.07% 55.318 5.90% 7.50% 35% 113 1.2 Debt/Equity based on book values 50% Debt/Equity based on market values 30% 6) What is the cost of equity? Cost of equity = Risk-free rate + Beta x (Market return - Risk-free rate) 7) What is the weight of equity in WACC calculations? 8) What is the WACC assuming that the firm as AA credit rating?

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