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Q1) Suppose a firm has 10.30 million shares of common stock outstanding at a price of $42.72 per share. The firm also has 259000.00 bonds
Q1) Suppose a firm has 10.30 million shares of common stock outstanding at a price of $42.72 per share. The firm also has 259000.00 bonds outstanding with a current price of $1,009.00. The outstanding bonds have yield to maturity 10.88%. The firm's common stock beta is 0.794 and the corporate tax rate is 36.00%. The expected market return is 11.47% and the T-bill rate is 5.05%. Compute the following: | |
a) Weight of Equity of the firm (2 points) | |
b) Weight of Debt of the firm (2 points) | |
c) Cost of Equity of the firm (2 points) | |
d) After Tax Cost of Debt of the firm (2 points) | |
e) WACC for the Firm (2 points) |
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