Question
Estimate your firms Weighted Average Cost of Capital. Assume that the current risk-free rate of interest is 3.6%, the market risk premium is 5.4%, and
Estimate your firms Weighted Average Cost of Capital. Assume that the current risk-free rate of interest is 3.6%, the market risk premium is 5.4%, and the corporate tax rate is 21%.
Debt:
Total book value: $10 million
Total market value: $18 million
Coupon rate: 5%
Yield to Maturity: 4%
Common Stock:
Total book value: $12 million
Total market value: $16 million
Beta = 1.1
Preferred Stock:
Total book value: $1 million
Total market value: $6.5 million
Price per share: $22
Dividend per share: $1
What is your firms Weighted Average Cost of Capital (input as a raw number rounded to the 4 decimal places, i.e. if your answer is 7.1356%, input 7.1356)?
Estimate your firms Weighted Average Cost of Capital. Assume that the current risk-free rate of interest is 3.6%, the market risk premium is 5.4%, and the corporate tax rate is 21%.
Debt:
Total book value: $10 million
Total market value: $18 million
Coupon rate: 5%
Yield to Maturity: 4%
Common Stock:
Total book value: $12 million
Total market value: $16 million
Beta = 1.1
Preferred Stock:
Total book value: $1 million
Total market value: $6.5 million
Price per share: $22
Dividend per share: $1
What is your firms Weighted Average Cost of Capital (input as a raw number rounded to the 4 decimal places, i.e. if your answer is 7.1356%, input 7.1356)?
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