XYZ Co has 1500 units of bonds outstanding. Each unit has $100 face value, 6% coupon rate with semi-annual payments, and 15 years to maturity. The risk-free rate is 3%, default risk premium for its bond is 2%, maturity risk premium for 15-year maturity is 1.5 %. XYZ has a tax rate of 20%.

5. Determine (a) the per share value of the stock and (b) the total market value of all stocks.

Using information from all above for the following questions.

You MUST label all your answers with numbers and alphabets such as 6.a, 6.b, , etc.

6. (a) How much debt relative to total value of debt and equity combined does XYZ have? (b) How much equity relative to total value of debt and equity combined does XYZ have?

7. (a) Determine the weighted average cost of capital of XYZ.