Question
SHOW ANSWERS IN EXCEL Toyota Motors has a target debt to equity ratio of 35%. The yield to maturity on the company's outstanding bonds is
SHOW ANSWERS IN EXCEL
Toyota Motors has a target debt to equity ratio of 35%. The yield to maturity on the company's outstanding bonds is 8.7%, the company's tax rate is 25% and the cost of equity of 12.9%. Assume the company has no preferred stock outstanding.
What is the company's WACC?
Assume the same 8.7% bond yield to maturity as for part a. If the company's WACC is estimated at 12.0% based on the WACC of similar companies, what is the company's estimated cost of equity capital?
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American Public School Finance
Authors: William Owings, Leslie Kaplan
2nd Edition
1111838046, 978-1111838041
