Question
A Company has 11,000,000 in outstanding debt in bonds. The Companys bonds are all 10-year bonds with coupon rate of 11% and yield of 7%.
A Company has 11,000,000 in outstanding debt in bonds. The Companys bonds are all 10-year bonds with coupon rate of 11% and yield of 7%. The Company has 1,200,000 shares outstanding. The book value per share is 5 while the market price is 25 per share. The Company has a beta of 1.44 and faces a tax rate of 27%. The market quotations show that the Companys share price rose 30% last year and analysts expect 20% growth in the next years. The main stock index on this capital market performs 11% yearly and T-Bond rate is 3%. Calculate the cost of common stock equity using the capital asset pricing model (CAPM) and the weighted average cost of capital (WACC) for this Company.
The Company's cost of debt is equal: % (round 1 digit after decimal point)
The Companys cost of common equity is equal: % (round 1 digit after decimal point)
The Companys weighted average cost of capital is equal: % (round 1 digit after decimal point)
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