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UUSLUTUU Orange Corp has 1 million shares outstanding, and the stock is currently trading at $10 per share. The company has 5000 coupon bonds outstanding.
UUSLUTUU Orange Corp has 1 million shares outstanding, and the stock is currently trading at $10 per share. The company has 5000 coupon bonds outstanding. Each coupon bond has a 11% annual coupon, face value of $1000, will mature in 5 years, and is currently priced at 94% of face value. You have decided to calculate the cost of equity using the SML equation. You have estimated that the niska free rate is 5%, and the expected rate of return on the market portfolio is 10%. You also have estimated that the equity beta of the company is 2.5. Finally, the company faces a tax rate of 50% Using the information given, calculate the cost of capital (WACC) of Orange Corp
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