2)A firm has a corporate bond traded in the secondary market. The maturity of this bond is 4 years and annual coupon interest rate is %25. The bond pays annual coupons and par value is 100 TL. The market price of this bond is 104 TL. Corporate tax is %20. This firm paid 1 TL per share dividend this year and the dividends are expected to grow at a rate of %8. The market price of one share is 5 TL. The beta of the firm is 1.35 and the risk free rate is %20. The firm targets a Debt/Equity ratio of 0.6. Estimate the approximate WACC for this firm.
2)A firm has a corporate bond traded in the secondary market. The maturity of this bond is 4 years and annual coupon interest rate is %25. The bond pays annual coupons and par value is 100 TL. The market price of this bond is 104 TL. Corporate tax is %20. This firm paid 1 TL per share dividend this year and the dividends are expected to grow at a rate of %8. The market price of one share is 5 TL. The beta of the firm is 1.35 and the risk free rate is %20. The firm targets a Debt/Equity ratio of 0.6. Estimate the approximate WACC for this 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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Transcribed Image Text:2)A firm has a corporate bond traded in the secondary market. The maturity of this bond is 4 years
and annual coupon interest rate is %25. The bond pays annual coupons and par value is 100 TL. The
market price of this bond is 104 TL. Corporate tax is %20. This firm paid 1 TL per share dividend this
year and the dividends are expected to grow at a rate of %8. The market price of one share is 5 TL.
The beta of the firm is 1.35 and the risk free rate is %20. The firm targets a Debt/Equity ratio of 0.6.
Estimate the approximate WACC for this firm.
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