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Question : Acort Industries has 99 million shares outstanding and a current

Acort Industries has 99 million shares outstanding and a current share price of $44 per share. It also has long-term debt outstanding. This debt is risk free, is four years away from maturity, has an annual coupon rate of 6%, and has a $120 million face value. The first of the remaining coupon payments will be due in exactly one year. The riskless interest rates for all maturities are constant at 3.6%. Acort has EBIT of $111 million, which is expected to remain constant each year. New capital expenditures are expected to equal depreciation and equal $17 million per year, while no changes to net working capital are expected in the future. The corporate tax rate is 40%, and Acort is expected to keep its debt-equity ratio constant in the future (by either issuing additional new debt or buying back some debt as time goes on).

**a.** Based on this information, estimate Acort's WACC.

**b.** What is Acort's equity cost of capital?