Suppose Riggley Corp. has a capital structure of 40% equity and 60% debt with the following information: a Beta of 0.7, Market Risk Premium of 5%. Riggley's average long term debt pays a 5% annual coupon with fifteen years to maturity, currently selling for $980 (face value of $1,000). If Riggley's tax rate is 15% and the risk free rate is 3%, what is the Weighted Average Cost of Capital?
Suppose Riggley Corp. has a capital structure of 40% equity and 60% debt with the following information: a Beta of 0.7, Market Risk Premium of 5%. Riggley's average long term debt pays a 5% annual coupon with fifteen years to maturity, currently selling for $980 (face value of $1,000). If Riggley's tax rate is 15% and the risk free rate is 3%, what is the Weighted Average Cost of Capital?
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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Suppose Riggley Corp. has a capital structure of 40% equity and 60% debt with the following information: a Beta of 0.7, Market Risk Premium of 5%. Riggley's average long term debt pays a 5% annual coupon with fifteen years to maturity, currently selling for $980 (face value of $1,000). If Riggley's tax rate is 15% and the risk free rate is 3%, what is the Weighted Average Cost of Capital?
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