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3. Maggie's Acting Company has 7,000,000 shares of stock outstanding at a price of $60/share and a Beta of 1.1. They have two bond issues:

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3. Maggie's Acting Company has 7,000,000 shares of stock outstanding at a price of $60/share and a Beta of 1.1. They have two bond issues: 1) $25,000,000 of Face Value maturing in 10 years. The price of one bond is 97, or 97% of Par. 2) 540,000,000 of Face Value maturing in 5 years. The price of one bond is 102, or 102% of par. The Risk-free rate is 3% and the expected Return on the Market is 10%. Companies with a similar risk profile to Maggie's Acting Company have a yield spread of 1.0% for 5-year bonds and 1.5% for 10-year bonds. a. What is the cost of debt (Rd)? 1. MV of total debt? ii. MV of debt 1? iii. MV of debt 2? iv. Weight of debt 1? v. Weight of debt 2? vi. Cost of debt 1? vil. Cost of debt 2? vil. Weighted average cost of debt which is Rd? 1. (Wd1 Rd1) + (Wd2.Rd2) b. What is the cost of equity (Re)? c. What is the market value of the equity (MVe)? d. What is the value of the firm (MVd + MVE) e. What is the weight of debt (Wd)? f. What is the weight of equity (We)? 8. What is the company's WACC

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