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Q1) Suppose a firm has 18.30 million shares of common stock outstanding at a price of $48.66 per share. The firm also has 107000.00 bonds
Q1) Suppose a firm has 18.30 million shares of common stock outstanding at a price of $48.66 per share. The firm also has 107000.00 bonds outstanding with a current price of $969.00. The outstanding bonds have yield to maturity 8.96%. The firm's common stock beta is 2.421 and the corporate tax rate is 37.00%. The expected market return is 11.88% and the T-bill rate is 3.19%. 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)
Please show your steps. |
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