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Blues, Inc. is an MNC located in the U.S. Blues would like to estimate its weighted average cost of capital. On average, bonds issued by Blues yield 5.42%. Currently, T-bill rates are 0.32% (0.0032 in decimals). Furthermore, Blues' stock has a beta of 1.34, and the return on the Wilshire 5000 stock index (a measure of the return on the market) is expected to be 11.50%. Blues has a debt-to-equity ratio (D/E) of 47% (or 0.47 in decimals). If Blues is in the 35% tax bracket, what is its (a) aftertax cost of debt, (b) cost of equity (ke), and (c) weighted average cost of capital (kc)? NOTE: Round to at least 4 decimal places in all intermediate calculations. Give your final answers for (a), (b), and (c) in percent, rounded to 2 decimal places.

Financial Management, Finance

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