QUESTION 51 The following information applies to the next 4 questions. The current market rate of return, E(RM) is 12% and the risk-free rate, RF is 4%. You have been given the job of determining your firm's cost of capital components. The company has 100,000 shares outstanding with a current market value of $60 per share. The debt represents 20% of the capital structure in market value and the yield to maturity is 8%. The beta of the equity is 1.0 and the tax rate is 30%. What is the market value of the firm's debt? $1 mil $1.25 mil $1.5 mil $1.75 mil $ 2 mil QUESTION 52 Continuation of the previous problem: The current market rate of return, E(RM) is 12% and the risk-free rate, RF is 4%. You have been given the job of determining your firm's cost of capital components. The company has 100,000 shares outstanding with a current market value of $60 per share. The debt represents 20% of the capital structure in market value and the yield to maturity is 8%. The beta of the equity is 1.0 and the tax rate is 30%. What is the required rate of return on equity? 12% 13.4% 15.2% 15.8% 16.4% QUESTION 53 Continuation of the previous problem: The current market rate of return, E(RM) is 12% and the risk-free rate, Reis 4%. You have been given the job of determining your firm's cost of capital components. The company has 100,000 shares outstanding with a current market value of $60 per share. The debt represents 20% of the capital structure in market value and the yield to maturity is 8%. The beta of the equity is 1.0 and the tax rate is 30%. What is the after-tax cost of debt? 4.8% 5.6% 5.8% 7.4% 8.0% QUESTION 54 Continuation of the previous problem: The current market rate of return, E(RM) is 12% and the risk-free rate, RF is 4%. You have been given the job of determining your firm's cost of capital components. The company has 100,000 shares outstanding with a current market value of $60 per share. The debt represents 20% of the capital structure in market value and the yield to maturity is 8%. The beta of the equity is 1.0 and the tax rate is 30%. What is the firm's WACC? 10.7% 11.4% 12.75% 13.0% 13.25%