Question
What is the yield to maturity on the bond issue? What percentages do the loan and bond issue contribute to the firms total debt? Find
- What is the yield to maturity on the bond issue?
- What percentages do the loan and bond issue contribute to the firms total debt?
- Find the after-tax weighted average cost of debt.
- What is cost of common stock?
- What is the market value of the common stock?
- What are the percentages of debt and equity in the firms capital structure?
- What is the firms weighted average cost of capital?
| Loan | Common stock | ||
| Amount | $10,000,000 | Beta | 1.10 |
| Interest rate | 0.045 | Shares outstanding | 10,000,000 |
| Bond issue | Price per share | $5.00 | |
| 30 yr. AAA rated | |||
| Number issued | 21,000 | ||
| Price per bond | $1,100 |
Tax rate 30% Riskfree rate 3% Market rate 11%
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The Little Book Of Market Wizards Lessons From The Greatest Traders
Authors: Jack D. Schwager
1st Edition
1118858697, 978-1118858691
