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Suppose a firm has 28.60 million shares of common stock outstanding at a price of $24.88 per share. The firm also has 334000.00 bonds outstanding
Suppose a firm has 28.60 million shares of common stock outstanding at a price of $24.88 per share. The firm also has 334000.00 bonds outstanding with a current price of $1,101.00. The outstanding bonds have yield to maturity 6.69%. The firm's common stock beta is 1.07 and the corporate tax rate is 35.00%. The expected market return is 10.85% and the T-bill rate is 4.28%. Compute the following:
- a. Weight of Equity of the firm:
- b. Weight of Debt of the firm:
- c. Cost of Equity of the firm:
- d. After Tax Cost of Debt of the firm:
- e. WACC for the Firm:
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To compute the requested values well use the following formulas a Weight of Equity Number of shares ...Get Instant Access to Expert-Tailored Solutions
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