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Bonds: The company issued 240,000 bonds. The bonds have 1,000 face value with 7.5% coupons with annual payments, 20 years to maturity, and currently sell
Bonds: The company issued 240,000 bonds. The bonds have 1,000 face value with 7.5% coupons with annual payments, 20 years to maturity, and currently sell for $940. The marginal tax rate is 40%z
Equity: The company has 9,000,000 shares of (common) stock outstanding, selling for $71 per share. The companys beta is 1.2, the risk free rate is 1%, and the market risk premium is 10%.
1. What is the total market value of this firm?
2. What percent of the companys financing is debt? What percent of the companys financing is equity?
3. What is the after-tax cost of debt?
4. What is the cost of equity
5. What is the companys weighted average cost of capital?
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