Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have been assigned to calculate the Weighted Average-Cost-of-Capital for your firm, which has two sources of long-term capital. Continue with the values and assumptions

image text in transcribed
You have been assigned to calculate the Weighted Average-Cost-of-Capital for your firm, which has two sources of long-term capital. Continue with the values and assumptions outlined above. The company's marginal tax rate is 28% First, there are 6,500,000 shares of common stock, which are currently selling for $153.12. You estimate the Bets of the firm's stock is 0.85. The current return on short-term T-Bills is 2.15%, and you feel that a reason assumption about the Market Risk Premium is 8.75% Second, there is an issue of 260,000 coupon bonds with a face value of $1,000, which pays 6.35% (annual) coupons, and mature in twenty-three years These bonds are currently trading for $118210 What is the firm's weighted average-cost-of-capital? (The answer is a percent, round your answer to two decimal places, es 475) Numeric Response

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cases In Healthcare Finance

Authors: Louis Gapenski

5th Edition

1567936113, 978-1567936117

More Books

Students also viewed these Finance questions

Question

What research background do you have?

Answered: 1 week ago

Question

4 What are the main practices associated with SHRM?

Answered: 1 week ago