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Intel wants to raise capital to build a factory to build chips in the U . S . The CEO asks you to calculate their
Intel wants to raise capital to build a factory to build chips in the US The CEO asks you to calculate their weighted average cost of capital. He is unsure what the best capital structure is so he wants you to optimize his capital structure. He does not want any more than of his capital to come from debt and he wants to have at least from preferred stock and at least from common equity.
He gives you the following data.
Tax rate
year, coupon, semiannual payment noncallable bonds sell for $
year coupon bonds sell for $ New bonds will be privately placed with no flotation cost.
$ par value, quarterly dividend, perpetual preferred stock sells for $
Common stock sells for $ They pay a dividend of $ and it has a growth rate of
Intel stock has a Beta of The risk free rate is and the market risk premium is Management believes their stock has a risk premium over their bonds of What is Intel's after tax cost of debt? A b c d What is Intel's cost of common equity using the CAPM method? A b c d What is Intel's cost of common equity using the BYRP method? A b c d What is Intel's weighted average cost of capital? A b c d
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