Finance, Inc. has equity with a market value of $30 million and debt with a market value of $15 million. Treasury bills that mature in one year yield 7% per year, and the expected return on the market...

Extracted text: Finance, Inc. has equity with a market value of $30 million and debt with a market value of $15 million. Treasury bills that mature in one year yield 7% per year, and the expected return on the market portfolio over the next year is 16%. The beta of Finance Inc.'s equity is .95. The firm pays no taxes. a) What is the firm's debt to equity ratio? b) What is the firm's weighted average cost of capital? c) What is the cost of capital for an otherwise identical all-equity firm? d) Interpret your answers from part (b) and (c).