Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sanstreet, Inc. went public by issuing 1 million shares of common stock at AED 25 per share. The shares are currently trading at AED 30

image text in transcribed
Sanstreet, Inc. went public by issuing 1 million shares of common stock at AED 25 per share. The shares are currently trading at AED 30 per share. Current risk free rate is 4%, market return is 12% and the company has a beta coefficient of 1.2. During last year, it issued 50,000 bonds of AED 1,000 par paying 10% coupon annually maturing in 20 years. Bond Yield is 10.6%. The bonds are currently trading at AED 950. The tax rate is 30%. Calculate the weighted average cost of capital. (10 Points, 2 ea.) 1. What is Firm X's after-tax cost of debt to nearest two decimal? _% (2 Pts) 2. What is Firm X's cost of equity? to nearest two decimals? _% (2 Pts) 3. What is Firm X's weight of debt? to nearest two decimals? % (2 Pts) 4. What is the weight of equity? to nearest two decimals? -% (2 Pts) 5. What is Firm X's WACC? to nearest two decimals? % (2 Pts)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance Accumulation And Monetary Power

Authors: Daniel Woodley

1st Edition

0367338556, 978-0367338558

More Books

Students also viewed these Finance questions