Question
XYZ Corporation . is issuing a $1,000 par value bond that pays 8% interest annually. Investors are expected to pay $975 for the 10-year bond.
XYZ Corporation . is issuing a $1,000 par value bond that pays 8% interest annually. Investors are expected to pay $975 for the 10-year bond. Bender and Co. can expect to pay an additional risk premium of 4.2% on common stock. What is the firm's cost of equity capital?
| A. | none of the available choices | |
| B. | 13.44 | |
| C. | 13.60 | |
| D. | 12.58 | |
| E. | 8.40 |
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Financial Economics
Authors: Zvi Bodie, Robert C Merton, David Cleeton
2nd Edition
0558785751, 9780558785758
