oOutstanding debt in the form of bonds with a face value = $1 bn.
debt in the form of bonds with a face value = $1 bn.
oCurrent quote = 110
oCoupon rate = 9%, Semiannual coupons, 15 years to maturity
o50 million shares, $80 per share
oBeta = 1.15
oMarket risk premium = 9%
oRisk-free rate = 5%
oThe firm's tax rate is 40%
ØWhat is the cost of debt?
with steps please use formulas
ØWhat is the cost of equity?
with steps please use
ØWhat are the capital structure weights?
ØCompute the Weighted Average Cost of Capital