The wilson bat company has, at market value, $300,000 in bonds and $700,000 in stock outstanding. the coupon rate on the debt, which is currently selling at par, is 7%. the company's current stock price is $20, with an equity beta of 1.8 and an expected dividend next year of $1.40 which is expected to grow at 6% indefinitely. the company faces a corporate tax rate of 25%. wilson is considering purchasing harrison balls, inc. as part of its acquisition research, wilson has determined that the average beta for ball manufacturers is 1.2. the current risk-free rate is 4%, and the current return on the s& p 500 is 8%. calculate wilson's wacc. the cfo directs that in calculating this wacc you are to calculate the equity return using the capm.

David consumes two things: gasoline (g) and bread (b). david's utility function is u(g, b) = 10g^0.25 b^0.75. use the lagrange technique to solve for david's optimal choices of gasoline and bread as a function of the price of gasoline, p_g, the price of bread, p_b, and his income m. with recent decrease in the price of gasoline (maybe due to external shock such as shale gas production) does david increase his consumption of gasoline? for david, how does partial differential g/partial differential p_g depend on his income m? that is, how does david's change in gasoline consumption due to an increase in the price of gasoline depend on his income level? to answer these questions, find the cross-partial derivative, |partial differential^2 g/partial differential m partial differential p_g.