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The current balance sheet of Stanford, Inc. records that the book value of its common equity is $540,000 and book value of its long-term interest-bearing
The current balance sheet of Stanford, Inc. records that the book value of its common equity is $540,000 and book value of its long-term interest-bearing debt is $297,000. The company has no preferred stock and the only debt it has is a 2.20% coupon bond issue that matures in eight years and that pays coupon interest once per annum. The bonds are currently trading in the marketplace at 94.72% of their face value. The company has 18,000 shares of common stock outstanding that are trading at $34.50 per share. The beta of the common stock is 0.75, the current risk-free rate is 1.80% per annum, and the market risk premium is 5.80%. The company tax rate is 2196. What is the company's cost of equity? What is the company's cost of debt? What is the weighted average cost of capital (WACC) for Stanford, Inc. [Provide your three answers as percentages in the freeform box provided by labeling your answers and presenting them as percentages to the nearest 0.0196. For instance, Cost of equity = 7.3596]
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