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Komishito has 100,000 bonds and 5,000,000 shares outstanding. The bonds have a 9% annual coupon (paid semi-annually), $1,000 face value, $1,100 market value and 10
Komishito has 100,000 bonds and 5,000,000 shares outstanding. The bonds have a 9% annual coupon (paid semi-annually), $1,000 face value, $1,100 market value and 10 year maturity. The beta on the stock is 1.20 and its price per share is $50. The riskless return is 6%, the expected market return is 14% and the corporate tax rate is 40%. a. What is the after-tax cost of debt financing? b. What is the after-tax cost of equity financing? c. What is the WACC
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