Question
Epson has one bond outstanding with a yield to maturity of 5% and a coupon rate of 8%. The company has no preferred stock. Epson's
Epson has one bond outstanding with a yield to maturity of 5% and a coupon rate of 8%. The company has no preferred stock. Epson's beta is 0.8, the risk-free rate is 0.6%, and the expected market risk premium is 6%. Epson has a target debt/equity ratio of 0.7 and a marginal tax rate of 34%. Attempt 2/10 for 9 pts.
Part 1 What is Epson's (pre-tax) cost of debt? 4+ decimals
Part 2 What is Epson's cost of equity? 4+ decimals.
Part 3 What is Epson's capital structure weight for equity, i.e., the fraction of long-term capital provided by equity? 3+ decimals
Part 4 What is Epson's weighted average cost of capital? 4+ decimals
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