Consider the following balance sheet:

Assets

Current assets                                         $38,000,000

Net plant, property, and equipment                    $101,000,000

Total Assets                                          $139,000,000

Liabilities and Equity                                           

Accounts payable $10,000,000

Accruals                                                $9,000,000

Current liabilities                                    $19,000,000

Long term debt (40,000 bonds, $1,000 face value)   $40,000,000

Total liabilities                                      $59,000,000

Common Stock (10,000,000 shares) $30,000,000

Retained Earnings                                      $50,000,000

Total shareholders equity                              $80,000,000

Total liabilities and shareholders equity             $139,000,000

This company's stock is currently selling for $7.50 per share and the bonds are selling for $889.50 per bond. These bonds' yield to maturity is 7.6%. The beta for this company is approximately equal to 1.1. The yield on a 6-month Treasury bill is 3.5% and the yield on a 20-year Treasury bond is 5.5%. The expected return on the stock market is 11.5%, but the stock market has had an average annual return of 14.5% during the past five years. This company is in the 40% tax bracket.

What is the cost of equity?

What is the after-tax cost of debt?

What are the weights on debt and equity?

What is the Weighted Average Cost of Capital?