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The common stock and debt of Android Corp. are valued at $57 million and $36 million, respectively. Investors currently require a 12% return on the
The common stock and debt of Android Corp. are valued at $57 million and $36 million, respectively. Investors currently require a 12% return on the common stock and a 6% return on the debt. There are no taxes. Calculate the weighted average cost of capital. Enter your answer as a percentage rounded to two decimal places. Do not include the percentage sign in your answers. Enter your response below. 9.68 Correct response: 9.68+0.01 Click "Verify" to proceed to the next part of the question. If Android Corp. issues an additional $14 million of debt and uses this money to retire common stock, what will be the expected return on the stock? Recall that the WACC under the inital capital structure is 9.68. Assume that the change in capital structure does not affect the risk of the debt. Enter your answer as a percentage rounded to two decimal places. Do not include the percentage sign in your answer. Enter your response below. Number Click "Verify" to proceed. Section Attempt 1 of 1 Verify
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