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

question 38

Essay

The following financial statement data pertains to Outside, Inc., a manufacturer of men's outerware (dollar amounts in millions):
$\begin{array}{llcc} \text { Total Assets } &\$145,782 \\ \text { Interest-Bearing Debt} &\$30,659\\ \text { Average Pre-tax borrowing cost } &9.25\%\\ \text { Common Equity: } &\\ \text { Book Value } &\$22,515\\ \text { Market Value} &\$60,843\\ \text { Income Tax Rate } &42\% \\ \text { Market Equity Beta } &0.88\\ \text { Market Premium } &8.5\%\\ \text {Risk-free interest rate } &2.4\%\\\end{array}$
Required:
a. Calculate the company s cost of equity capital.
b. Calculate the weight on debt capit al that should be used to determine Outside'sweightech-average cost of capital.
c. Calculate the weight on equity capital that should be used to determine Outside'sweighted-average cost of capital.
d. Calculate Outside's weighted-average cost of capital.

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Definitions:

Voyeurism

A disorder or behavior characterized by gaining sexual pleasure from secretly observing unsuspecting people who are naked, disrobing, or engaging in sexual activity.

Peeping Toms

Individuals who secretly watch others without their consent, typically for sexual gratification.

Transvestite

An individual who enjoys wearing clothes traditionally associated with the opposite sex, primarily for emotional or sexual satisfaction.

Sex-change Surgery

Sex-change surgery, also known as gender affirmation surgery, is a medical procedure to change a person's physical sex to match their gender identity.