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1) Company XYZ has 8.3 million shares outstanding. The current share price is $53, and the book value per share is $4. XYZ has two
1) Company XYZ has 8.3 million shares outstanding. The current share price is $53, and the book value per share is $4. XYZ has two bonds outstanding. a) Bond 1 has a face value of $70 million and a 7 percent Coupon rate and sells for 108.3% of par. b) Bond 2 has a face value of $60 million and 7.5% coupon rate and sells for 108.9% of par. Bond 1 matures in 8 years, Bond 2 matures in 27 years. All coupon payments are semi-annual. (0) Find the company's capital structure weights on a market value basis. Find the Capital structure weights on a book value basis. (Book value of the debt = Face Value and the market value of the debt price quote times the face value) (ii) Suppose the company has a beta of 1.2, the risk free rate is 3.1percent, and the market risk premium is 7%. What is the WACC? Assume that the tax rate is 35%
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