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):
$\begin{array}{l}\begin{array}{l}\text { Total Assets } \\\text { Interest-Bearing Debt } \\\text { Average Pre-taxborrowing cost } \\ \text { Common Equity: } \\\text { Book Value } \\\text { Market Value } \\\text { Income Tax Rate } \\\text { Market Equity Beta } \\\text { Market Premium }\\\text { Piek-frep interest rate }\end{array}\begin{array}{lll}\$ 154,287 \\\$ 33,984 \\7.75 \% \\\\\$ 21,365 \\\$ 66,735 \\39.6 \% \\0.77 \\7.45 \% \\25 \%\end{array}\end{array}$
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.