Question
10.1 million outstanding shares (trading at $10 per share, with an equity beta of 1.3). Company has 19,200 outstanding bonds (7% coupon rate, due in
10.1 million outstanding shares (trading at $10 per share, with an equity beta of 1.3). Company has 19,200 outstanding bonds (7% coupon rate, due in 10 years, payable semi-annually). Bonds are rated BBB (credit spread of BBB is 121 basis points over equivalent-maturity Government of Canada debt). The bonds have a current yield of 3%, compounded semi-annually. Risk-free interest rate: 2.4% Market risk premium: 6.5% Tax rate: 23%
Questions 1. Calculate the WACC 2. If the company has 70% debt financed, what is WACC?
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Financial Management For Public Health And Not For Profit Organization
Authors: Steven A. Finkler
3rd International Edition
0138152772, 9780138152772
