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XYZ manufactures parts for the auto industry. The company currently has 20 million shares outstanding trading at $25 per share. The company has two hundred
XYZ manufactures parts for the auto industry. The company currently has 20 million shares outstanding trading at $25 per share. | ||||||||
The company has two hundred $1000 par value bonds outstanding with a coupon rate of 6.25% paid semiannually. | ||||||||
The bonds are currently trading at 101 and mature in 12 years. | ||||||||
XYZ has a beta of .85 | ||||||||
The 10-year Treasury yield is 4 percent | ||||||||
The expected return on the market is 10 percent | ||||||||
XYZ's tax rate is 21 percent | ||||||||
a. Calculate XYZ's cost of debt | ||||||||
b. Calculate XYZ's cost of equity | ||||||||
c. Calculate XYZ's WACC | ||||||||
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