Using the information in the two figures below and assuming that the risk free rate is 3.8% and the market risk premium is 7% and Ciena's tax rate is 25% estimate its pre- tax cost of debt. Capital Structure (Millions of USD) Market Cap ST Debt LT Debt Pref. Eqty Total Ciena Corp Cost of Capital - Current Market Value 3) Equity 4) Debt Cost (A-T) 5) Preferred Equity WACC 5,940.9 78.7% 28.4 0.4% 1,576.7 20.9% 0.0 0.0% 7,545.9 100.0% Weight 78.7% 21.3% 0.0% Cost 11.5% 5.1% 0.0%

Using the information in the two figures below and assuming that the risk free rate is 3.8% and the market risk premium is 7% and Ciena's tax rate is 25% estimate its pre- tax cost of debt. Capital Structure (Millions of USD) Market Cap ST Debt LT Debt Pref. Eqty Total Ciena Corp Cost of Capital - Current Market Value 3) Equity 4) Debt Cost (A-T) 5) Preferred Equity WACC 5,940.9 78.7% 28.4 0.4% 1,576.7 20.9% 0.0 0.0% 7,545.9 100.0% Weight 78.7% 21.3% 0.0% Cost 11.5% 5.1% 0.0%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 11EP

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