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A firms book value of debt is $1,000,000. Debt carries 5% annual coupon and matures in 5 years. It trades at 90% of the par
A firms book value of debt is $1,000,000. Debt carries 5% annual coupon and matures in 5 years. It trades at 90% of the par value. The company has 100,000 shares outstanding. The book value per share is $4.60 and shares trade at $5.60 on the market. The risk free rate is 6%, the MRP is 8%, and the stocks beta is 1.2. The tax rate is 25%. Compute the capital structure weights and the firms WACC. D/V = 0. .. E/V = 0. .. WACC = %
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