Question
Company A currently has a stock price $20/per share, with outstanding shares 2 Mil shares. It also has outstanding debt of 20 Mil. Tax rate
Company A currently has a stock price $20/per share, with outstanding shares 2 Mil shares. It also has outstanding debt of 20 Mil. Tax rate is 30%. Its annual bond with 10 year maturity date has a price now $886, par value $1000 and coupon rate is 7%. It has a beta of risk 1.2, risk free rate 4% and market index return 9%.
Please answer following parts with above information
Part1) what is the cost of debt before tax?
Part 2) what is the after tax cost of debt?
Part 3) how much is total equity?
Part 4) what is the cost of equity?
Part5) what is the weight of debt?
Part 6) what is the WACC?
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