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Martin Mining has the following information regarding its debt and equity. Find the weighted average cost of capital. Assume the tax rate is 25%. Beta
- Martin Mining has the following information regarding its debt and equity. Find the weighted average cost of capital. Assume the tax rate is 25%.
| Beta | 1.25 |
| Expected Return on Market | 13.75% |
| Treasury Bond Rate | 2.3% |
| Flotation Cost of Equity | 3% |
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| Book Value of Debt | $3,000,000,000 |
| Market Value of Debt | $3,500,000,000 |
| Book Value of Equity | $5,500,000,000 |
| Market Value of Equity | $4,250,000,000 |
| Bond Information | Coupon rate = 6%, maturity = 20 years, maturity value =$1,000 and the current price is 982.25. Assume interest is paid semiannually. |
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