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Equity Information 50 million shares $80 per share Beta = 1.11 Market risk premium = 7% Risk-free rate = 2% Debt Information $1 billion in

Equity Information

  1. 50 million shares
  2. $80 per share
  3. Beta = 1.11
  4. Market risk premium = 7%
  5. Risk-free rate = 2%

Debt Information

  1. $1 billion in outstanding debt (face value)
  2. Current quote = 108
  3. Coupon rate = 9%, semiannual coupons
  4. 15 years to maturity
  5. Tax rate =35%

What is WACC?

What are the capital structure weights? E/V?

What is the after tax cost of debt?

What is the before tax cost of debt?

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