Q5. Burwood Investment Limited has: 8 million shares of common stock outstanding, the price is $32 and
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Q5. Burwood Investment Limited has:
8 million shares of common stock outstanding, the price is $32 and beta is 1.15. Market risk premium is 10%, T-bills are yielding 5%.
0.5 million shares of 6% preferred stock outstanding, the price is $67.
100,000 of 9% semi-annual bonds outstanding, 15 years to maturity, and sell for 91% of par. The current yield to maturity on these bonds is 10.18%p.a.
(a)If the applicable tax rate is 35% p.a., what is the capital structure of the firm?
(b) What is the firm's WACC?
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