Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer the following question in Excel - ABC Incorporated shares are currently trading for $32 per share. The firm has 1.13 billion shares outstanding.

Please answer the following question in Excel

- ABC Incorporated shares are currently trading for $32 per share. The firm has 1.13 billion shares outstanding. The market value of the firms debt is $2 billion. The 10-year Treasury bond rate is 6.25%. ABC as an outstanding credit rating and has earned a AAA rating from the major credit rating agencies: the current yield on AAA bonds is 6.45%. The historical equity market risk premium is 5.5%. ABCs equity beta is estimated to be 1.1, and its marginal tax rate (including federal, state, local, and international taxes) is 40%.

a. What is ABCs cost of equity?

b. What is ABCs after-tax cost of debt?

c. What is ABCs WACC

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics And Personal Finance

Authors: Irvin Tucker, Joan Ryan

1st Edition

1133562108, 978-1133562108

More Books

Students also viewed these Finance questions

Question

1 What theories are implicit in these reward systems?

Answered: 1 week ago