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2. ING bank pays an average of 8% interest on its debt. The bank has a market return of 10% and a market beta of
2. ING bank pays an average of 8% interest on its debt. The bank has a market return of 10% and a market beta of 1.10. Currently, the 10-year treasury rate in the Netherlands is 4.0%. The market values (in millions) of its debt and equity are $5,280 and $3,520, respectively. The bank has a marginal tax rate of 35%. Required: (a) Compute the cost of debt after tax and cost of equity. (b) Determine the weighted average cost of capital
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