The Following Financial Statement Data Pertains to Northridge, Inc Required:
A

Essay

The following financial statement data pertains to Northridge, Inc., a manufacturer of women's outerware (dollar amounts in millions):
$\begin{array}{llcc} \text { Total Assets }& \$145,782& \\ \text { Interest-Bearing Debt } &\$32,659\\ \text { Average Pre-tax borrowing cost } &8.25\%\\ \text {Common Equity: } &\\ \text { Book Value } &\$22,515\\ \text {Market Value } &\$65,843\\ \text {Income Tax Rate } &40\%\\ \text { Market Equity Beta} &0.85\\ \text {Market Premium } &7.5\%\\ \text { Risk-free interest rate } &2.2\%\\\end{array}$
Required:
a. Calculate the company's cost of equity capital.
b. Calculate the weight on debt c apital that should be used to determine Notthidge's weighte ch average cost of capital
c. Calculate the weight on equity capital that should be used to determine Northridge's weighted-average cost of capital.
d. Calculate Northricge's weighted-average cost of capital.