Intro Consider the following information for Clinkle Company: Stock information: • Stock price: $54 • Number of shares outstanding: 18 million • Beta: 1.4 Bond information: • Value of debt: $680 million • Pre-tax cost of debt: 6.5% Other information • Tax rate: 21% • Government bond interest rate: 3% • Expected return on the S&P 500: 6% Part 1 What is the cost of equity? 3+ decimals Submit

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Intro
Consider the following information for Clinkle Company:
Stock information:
• Stock price: $54
• Number of shares outstanding: 18 million
• Beta: 1.4
Bond information:
Value of debt: $680 million
• Pre-tax cost of debt: 6.5%
Other information
• Tax rate: 21%
• Government bond interest rate: 3%
Expected return on the S&P 500: 6%
Part 1
What is the cost of equity?
3+ decimals
Submit
Transcribed Image Text:Intro Consider the following information for Clinkle Company: Stock information: • Stock price: $54 • Number of shares outstanding: 18 million • Beta: 1.4 Bond information: Value of debt: $680 million • Pre-tax cost of debt: 6.5% Other information • Tax rate: 21% • Government bond interest rate: 3% Expected return on the S&P 500: 6% Part 1 What is the cost of equity? 3+ decimals Submit
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