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
Problem 1PS
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Transcribed Image Text:Based on the information below on a company, perform the following to compute the WACC
(weighted average cost of capita)
Share price $3.00
Number of shares outstanding = 10 million
Beta = 2.0
Last traded price of each 5% bond = $1,010
Bonds pay coupons annually and mature in 5 years
Face value of bond = $1,000
Number of bonds issued = 20,000
Yield on government long-term bond = 2%
Equity risk premium = 4%
Singapore corporate tax rate = 20%
(a)
Determine the cost of equity
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