Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A Toys Company has 1.4 million shares in issue. The current market price is $45 per share. The company's debt is publicly traded on the
A Toys Company has 1.4 million shares in issue. The current market price is $45 per share. The company's debt is publicly traded on the New York Stock Exchange and the most recent quote for its price was at 95% of face value. The debt has a total face value of $ 7 million and the company's credit risk premium is currently 2.7%. The risk-free rate is 3.2% and the equity market risk premium is 6.8%. The company's beta is estimated at 1.1 and its corporate tax rate is 35%. Calculate the company's cost of equity Select one: a. 10.68% b. 6.8% C. 7.48% d. 3.2%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started