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

Essay

The following financial statement data pertains to Southwater,Inc.,a manufacturer of women's suits (dollar amounts in millions):
$$\begin{array} { l r } \text { Tatal As5ets } & \$ 154,287 \\\text { Interest-Bearing Debt } & \$ 33,984 \\\text { Average Pre-tar barrowing cast } & 7.75 \% \\\text { Cammon Equity: } & \\\quad \text { Bodk Value } & \$ 21,365 \\\text { Market Value } & \$ 66,735 \\\text { Incame Tax Rate } & 39.6 \% \\\text { Market Equity Beta } & 0.77 \\\text { Market Premium } & 7,45 \% \\\text { Risk-Ere intereftrate } & 2,5 \%\end{array}$$
Required: a.Calculate the company's cost of equity capital.
b.Calculate the weight on debt capital that should be used to determine Northridge's weighted-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 Northridge's weighted-average cost of capital.