Question
Use the information below to calculate Weighted Average Cost of Capital, assuming that no new shares will need to be sold and a capital structure
Use the information below to calculate Weighted Average Cost of Capital, assuming that no new shares will need to be sold and a capital structure that is 50% debt and 50% equity.
| coupon rate on bonds | 13.00% |
| corporate tax rate | 25.00% |
| anticipated dividend | $5.00 |
| yield to maturity on bonds | 11.00% |
| current share price | $100.00 |
| floatation costs | 5.00% |
| expected growth rate | 7.00% |
a.
10.13%
b.
10.26%
c.
12.13%
d.
11.88%
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Corporate Finance
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
3rd Edition
0077173635, 9780077173630
