Question
Tarrasa Mining Corporation has 7.1 million shares of common stock outstanding and 195,000 6.4% semiannual bonds outstanding, par value $1,000 each. The common stock currently
Tarrasa Mining Corporation has 7.1 million shares of common stock outstanding and 195,000 6.4% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $28 per share and has a beta of 1.6. The bonds have 14 years to maturity and sell for 107% of par. The market risk premium is 7.5%, T-bills are yielding 6%, and Tarrasa Mining's tax rate is 40%
What is the firm's market value weight of equity?(answer 49.79%)
What is the firm's market value weight of debt?(Answer 51.21%)
What is the firm's cost of equity?(Answer 18.00%)
What is the firm's cost of debt?(Answer 5.67% this is the one I cant get my answer is 5.665)
If Tarrasa Mining is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows?(Answer 10.52% this is also one I cant get my answer is 11.01%)
Please show the formulas for these to answers
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