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please help Phillips Equipment Inc. has 67,000 bonds outstanding that are each selling at $1,088 in the market. Each bond has 8 years left to
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Phillips Equipment Inc. has 67,000 bonds outstanding that are each selling at $1,088 in the market. Each bond has 8 years left to maturity, a $1000 face value and a coupon rate of 6%. Coupons are paid semiannually. The company also has 2.4 million shares of common stock outstanding. The common stock has a beta of 1.1 and sells for $43 a share. The U.S. Treasury bill is yielding 2.7 percent and the return on the market is 9 percent. The corporate tax rate is 35 percent. (a) Determine the firms market value weight for debt (Enter answers as a \% to 2 decimal places) % (b) Determine the firms market value weight for equity (Enter answers as a \% to 2 decimal places) (c) What is the firms after tax cost of debt? (Enter answers as a \% to 2 decimal places) (d) What is the firms cost of equity? (Enter answers as a \% to 2 decimal places) % (e) Using the information you have found in the earlier parts, determine the Cost of Capital for Phillips Equipment Inc. (Enter answers as a \% to 2 decimal places)Step by Step Solution
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