Question
First Data Co. has 20 million shares of common stock outstanding that are currently trading at $25 per share. The firms debt is publicly trading
First Data Co. has 20 million shares of common stock outstanding that are currently trading at $25 per share. The firms debt is publicly trading at 95% of its $180 million face value. The before-tax cost of debt (already adjusted for the fact that existing debt is trading at a discount) is 10% and the cost of equity is 20%. What is the weighted average cost of capital for the firm assuming at 40% corporate tax rate?First Data Co. has 20 million shares of common stock outstanding that are currently trading at $25 per share. The firms debt is publicly trading at 95% of its $180 million face value. The before-tax cost of debt (already adjusted for the fact that existing debt is trading at a discount) is 10% and the cost of equity is 20%. What is the weighted average cost of capital for the firm assuming at 40% corporate tax rate?
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