Question
12 Mature Industries (MI) Inc. has the following financing outstanding: 40,000 bonds with 8% coupon (semiannual paid), face value = $1,000, price = 160 %
12 Mature Industries (MI) Inc. has the following financing outstanding: 40,000 bonds with 8% coupon (semiannual paid), face value = $1,000, price = 160 % (Bonds price quoted as a percentage of the face value), 10 years maturity 10,000 zero coupon bonds, Face Value = $1,000, price = 75%, maturity = 10 years 50,000 shares of common stock, price = $50, beta = 1.2 Additional information: Tax rate = 30%, market risk premium = 8%, risk-free rate = 2% Calculate the Company's: (a) What is the cost of coupon debt? (b) What is the cost of zero-coupon debt? (c) What is the cost of equity? (d) What is the WACC
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