Question
Consider the following information for Federated Junkyards of America. Debt: $83,000,000 book value outstanding. The debt is trading at 87% of book value. The yield
Consider the following information for Federated Junkyards of America.
- Debt: $83,000,000 book value outstanding. The debt is trading at 87% of book value. The yield to maturity is 8%.
- Equity: 3,300,000 shares selling at $50 per share. Assume the expected rate of return on Federateds stock is 17%.
- Taxes: Federateds marginal tax rate is Tc = 0.21.
Calculate the weighted-average cost of capital (WACC). (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
10th Edition
1260013820, 978-1260013825
