Question
How do I determine the cost of debt and the cost of equity use the following variables...then the WEIGHTED cost of debt and equity. I
How do I determine the cost of debt and the cost of equity use the following variables...then the WEIGHTED cost of debt and equity. I assume the cost of debt = $75 x .90 = $65.50 ---> what is weighted cost of debt? Do I divided $65.50/total of D+E? Calculate the weighted-average cost of capital (WACC) for Federated Junkyards of America, using the following information: - Debt: $75,000,000 book value outstanding. The debt is trading at 90% of book value. The yield to maturity is 9%. - Equity: 2,500,000 shares selling at $42 per share. Assume the expected rate of return on Federateds stock is 18%. - Taxes: Federateds marginal tax rate is Tc = .35.
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