Question
You have the following information about about a firm: Beta is 1.1, the risk free rate is 3% and the return on the market is
You have the following information about about a firm:
Beta is 1.1, the risk free rate is 3% and the return on the market is 8%
Each bond has a face value of $1,000 and a price of $971
The bonds are semi annual, have 11 years to maturity and a coupon rate of 7%
The firm has a target Debt to Equity ratio of 0.3 and a tax rate of 40%
What is the firm's weighted average cost of capital?
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Global Banking
Authors: Roy C Smith, Ingo Walter, Gayle DeLong
3rd Edition
0195335937, 9780195335934
