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Aligram Software Ltd has five million shares outstanding and itsmarket price is $61 per share. The company has only two bondsoutstanding. Bond A is a 15-year bond issued four years ago, whichhas a face value of $100 million and a coupon rate of 5%, and isselling for 95% of the par value. Bond B is a five-year bond issuedone year ago, which has a face value of $60 million and a couponrate of 6.5%, and is sel ling for 103% of the par value. Both bondspay coupon semiannually.a What are the company’s capital structure weights (both equityand debt) on a market value basis?b If the cost of equity is 11%, and the tax rate is 15%, what isthe company’s Weighted Average Cost of Capital (WACC)?
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