Question
Q1) Suppose a firm has 10.70 million shares of common stock outstanding at a price of $37.79 per share. The firm also has 327000.00 bonds
| Q1) Suppose a firm has 10.70 million shares of common stock outstanding at a price of $37.79 per share. The firm also has 327000.00 bonds outstanding with a current price of $931.00. The outstanding bonds have yield to maturity 6.04%. The firm's common stock beta is 1.287 and the corporate tax rate is 36.00%. The expected market return is 12.35% and the T-bill rate is 5.81%. Compute the following: |
| a) Weight of Equity of the firm? |
| b) Weight of Debt of the firm? |
| c) Cost of Equity of the firm ? |
| d) After Tax Cost of Debt of the firm ? |
| e) WACC for the Firm ? |
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
9th edition
978-1119493631
