Question
need help with 10 pls 10 - the previous problem, suppose the companys stock has a betaof 1.10. The risk-free rate is 2.9 percent and
need help with 10 pls
10 - the previous problem, suppose the companys stock has a betaof 1.10. The risk-free rate is 2.9 percent and the market risk premium is 7 percent. Assumethat the overall cost of debt is the weighted average implied by the two outstanding debtissues. Both bonds make semiannual payments. The tax rate is 23 percent. What is thecompanys WACC?
9 - Manufacturing has 7.6 million shares of commonstock outstanding. The current share price is $67 and the book value per share is $4. Thecompany also has two bond issues outstanding, both with semiannual coupons. The firstbond issue has a face value of $80 million and a coupon rate of 6.8 percent and sells for109.5 percent of par. The second issue has a face value of $65 million and a coupon rateof 7.1 percent and sells for 112.4 percent of par. The first issue matures in 9 years, thesecond in 25 years.a.What are the companys capital structure weights on a book value basis?b.What are the companys capital structure weights on a market value basis?c.Which are more relevant, the book or market value weights? Why?
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