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Your task is to find the cost of capital(WACC) for a company. The company has three sources of capital available. The marginal tax rate for
Your task is to find the cost of capital(WACC) for a company. The company has three sources of capital available. The marginal tax rate for the company is 40%.
Debt: 2000 coupon bonds with 3% annual coupon outstanding. With $1000 par value and currently trading at 90% of the par. bonds currently offer 5% yield to bondholders.
common stock: 100,000 shares outstanding with the book value of $15 but currently trading at P/B=2.0. one may apply CAPM to estimate the cost equity. Input for estimations are risk free rate 3%. Market risk premium 6% and the stock beta is 1.20.
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