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You have the following information about Burgundy Basins, a sink manufacturer. Equity shares outstanding Stock price per share Yield to maturity on debt Book
You have the following information about Burgundy Basins, a sink manufacturer. Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt Market value of debt Book value of equity Cost of equity capital Tax rate 20 million $ 41 5.5% $ 360 million 4.6% $ 255 million $ 430 million 12.2% 35% Burgundy is contemplating what for the company is an average-risk investment costing $42 million and promising an annual ATCF of $5.1 million in perpetuity. a. What is the internal rate of return on the investment? Note: Round your answer to 2 decimal places. Internal rate of return % b. What is Burgundy's weighted-average cost of capital? Note: Round your answer to 2 decimal places. Weighted-average cost %
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