Tax rate 30% Riskfree rate 3% Market rate 11%

1. What is the yield to maturity on the bond issue?
2. What percentages do the loan and bond issue contribute to the firms total debt?
3. Find the after-tax weighted average cost of debt.
4. What is cost of common stock?
5. What is the market value of the common stock?
6. What are the percentages of debt and equity in the firms capital structure?

7. What is the firms weighted average cost of capital?

Use the chart below and the yields to maturity chart in the slides to answer Questions 1 to 7. Common stock Loan $5,000,000 Amount Beta 1.40 Shares outstanding Price per share 2,000,000 $9.45 Interest rate 0.05 Bond issue 7 y. AA rated Number issued 7,500 $1,010 Price per bond Use the chart below and the yields to maturity chart in the slides to answer Questions 1 to 7. Common stock Loan $5,000,000 Amount Beta 1.40 Shares outstanding Price per share 2,000,000 $9.45 Interest rate 0.05 Bond issue 7 y. AA rated Number issued 7,500 $1,010 Price per bond