Question
Starlight Foods went public by issuing 1 million shares of common stock @ $25 per share. The shares are currently trading at $30 per share.
Starlight Foods went public by issuing 1 million shares of common stock @ $25 per share. The shares are currently trading at $30 per share. Current risk free rate is 4%, market risk premium is 8% and the company has a beta coefficient of 1.2.
During last year, it issued 50,000 bonds of $1,000 par (FV) paying 10% coupon annually maturing in 20 years. The bonds are currently trading (PV)) at $950.
The tax rate is 30%. Calculate the weighted average cost of capital. PLEASE SHOW ALL STEPS . DO NOT USE FINANCIAL CALCULATOR.
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Finance Basics 20 Minute Manager
Authors: Harvard Business Review
1st Edition
1625270852, 978-1625270856
