Let's assume that your unique code is: X=50

Company ABC is interested in estimating it's cost of capital. You have the following information:

Company ABC current stock price is 60 EUR. The company has issued altogether 10 000 stocks that trade at the market. The company pays no dividends but we know it's beta which is 1.X. The current market risk premium is estimated as 5% and the risk free rate is 1.5%. However, the company was able to borrow at the rate of 3.X% by issuing 5 000 bonds with 5 years to maturity which currently trade at 90 EUR per bond and have a par value of 100 EUR. This is the only debt, the company has. The firm's tax rate is 40%.

NOTE: ReplaceXwith your unique code

Questions:

a)Estimate the cost of equity and debt

b)Find the weights of debt and equity in the total capital

c)Find the cost of capital (WACC) for the company

d)Explain shortly, how the cost of capital is applied to evaluate the capital investments in the company