GenCorp, an automotive parts manufacturer, currently has $25 million in outstanding debt and has 10 million shares

Question:

GenCorp, an automotive parts manufacturer, currently has $25 million in outstanding debt and has 10 million shares outstanding. The book value per share is $10, and the market price per share is $25. The company is currently rated A, its bonds have a yield to of 10%, and the current beta of the stock is 1.06. The risk-free rate is 8% now, and the company’s tax is 40%.
a. What is the company’s current weighted average cost of capital?
b. The company is considering a repurchase of 4 million shares at $25 per share with new debt. It is estimated that this will push the company’s rating down to a B (with a yield to of 13%). What will the company’s WACC be after the stock repurchase?
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...