8) Acort Industries has 10 million shares outstanding and a current share price of $40 per...

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8) Acort Industries has 10 million shares outstanding and acurrent share price of $40 per share. It also has? long-term debtoutstanding. This debt is risk? free, is four years away from?maturity, has an annual coupon rate of 10%?, and has a $100 millionface value. The first of the remaining coupon payments will be duein exactly one year. The riskless interest rates for all maturitiesare constant at 6%. Acort has EBIT of $106 ?million, which isexpected to remain constant each year. New capital expenditures areexpected to equal depreciation and equal $13 million per? year,while no changes to net working capital are expected in the future.The corporate tax rate is 40%?, and Acort is expected to keep its?debt-equity ratio constant in the future? (by either issuingadditional new debt or buying back some debt as time goes? on).
a. Based on this? information, estimate? Acort's WACC.
b. What is? Acort's equity cost of? capital?

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8) Acort Industries has 10 million shares outstanding and acurrent share price of $40 per share. It also has? long-term debtoutstanding. This debt is risk? free, is four years away from?maturity, has an annual coupon rate of 10%?, and has a $100 millionface value. The first of the remaining coupon payments will be duein exactly one year. The riskless interest rates for all maturitiesare constant at 6%. Acort has EBIT of $106 ?million, which isexpected to remain constant each year. New capital expenditures areexpected to equal depreciation and equal $13 million per? year,while no changes to net working capital are expected in the future.The corporate tax rate is 40%?, and Acort is expected to keep its?debt-equity ratio constant in the future? (by either issuingadditional new debt or buying back some debt as time goes? on).a. Based on this? information, estimate? Acort's WACC.b. What is? Acort's equity cost of? capital?