A firm has 50 million shares of common stock outstanding with a market price of...
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Accounting
A firm has 50 million shares of common stock outstanding with a market price of $100 per share. The firm's beta is 1.5, the risk-free rate is 3%. and the expected market portfolio return is 12%. The firm also has outstanding semi-annual coupon bonds with a face value of $2 billion. The bonds mature in 10 years, and have a coupon rate of 10%. The current price for one bond is $1100. The tax rate is 30%.
What is the weight for equity?
What is the weight for debt?
What is the cost of equity?
What is the effective cost of debt?
What is the WACC?
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