2) Suppose a firm has 42.50 million shares of price of $27.96 per share. The firm also has utstanding with a current price of $1,194.00. ield to maturity 7.87%. The firm's common sto orporate tax rate is 36.00%. The expected ma he T-bill rate is 5.91%. Compute the following: -Weight of Equity of the firm -Weight of Debt of the firm -Cost of Equity of the firm -After Tax Cost of Debt of the firm

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Q) Suppose a firm has 42.50 million shares of common stock outstanding at
a price of $27.96 per share. The firm also has 280000.00 bonds
outstanding with a current price of $1,194.00. The outstanding bonds have
yield to maturity 7.87%. The firm's common stock beta is 0.92 and the
corporate tax rate is 36.00%. The expected market return is 10.55% and
the T-bill rate is 5.91%. Compute the following:
-Weight of Equity of the firm
-Weight of Debt of the firm
-Cost of Equity of the firm
-After Tax Cost of Debt of the firm
-WACC for the Firm
Transcribed Image Text:Q) Suppose a firm has 42.50 million shares of common stock outstanding at a price of $27.96 per share. The firm also has 280000.00 bonds outstanding with a current price of $1,194.00. The outstanding bonds have yield to maturity 7.87%. The firm's common stock beta is 0.92 and the corporate tax rate is 36.00%. The expected market return is 10.55% and the T-bill rate is 5.91%. Compute the following: -Weight of Equity of the firm -Weight of Debt of the firm -Cost of Equity of the firm -After Tax Cost of Debt of the firm -WACC for the Firm
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