Question
David Ortiz Motors has a capital structure of 40% debt and 60% equity. The yield to maturity on the companys outstanding bonds is 7.62% and
David Ortiz Motors has a capital structure of 40% debt and 60% equity. The yield to maturity on the companys outstanding bonds is 7.62% and the companys tax rate is 35%. Ortizs CFO has calculated the companys cost of equity is 18.93%.
What is the Weighted Average Cost of Capital for David Ortiz Motors?
Please round your answer to the fourth decimal. If your answer is 1.23%, you should input 0.0123.
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Finance And Economics Discussion Series Specification Analysis Of Structural Credit Risk Models
Authors: United States Federal Reserve Board, Jing Zhi Huang, Hao Zhou
1st Edition
1288706871, 9781288706877
