Key facts and assumptions concerning Costco Company, at December 31, 2011, appear below:
Yield to maturity on long-term government bonds: 3.28%
Yield to maturity on company long-term bonds: 4.62%
Coupon rate on company long-term bonds: 5.50%
Market price of risk, or risk premium: 6.10%
Estimated company equity beta: 0.80
Stock price per share: $75.08
Number of shares outstanding: 449.5 million
Book value of equity: $11,585 million
Book value of interest-bearing debt: $2,524 million
Tax rate: 35%
Use the above information to answer the following questions.
1. Estimate Costco's cost of equity capital.
2. Estimate Costco's weighted-average cost of capital.
Please provide calculation details