please calculate the cost of equity, it is wrong If Wild Widgets Inc. were an all-equity company, it would have a beta of 1.35. The
If Wild Widgets Inc. were an all-equity company, it would have a beta of 1.35. The company has a target debt-to-equity ratio of 0.2. The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 5.0 percent. The company has one bond issue outstanding that matures in 20 years and has a 9.0 percent coupon rate. The bond currently sells for $1,180. The corporate tax rate is 34 percent. a. What is the company's cost of debt? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit % sign in your response.) b. What is the company's cost of equity? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit % sign in your response.) cost of equity
Step by Step Solution
There are 3 Steps involved in it
Step: 1
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started