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Given the following information about your firm’s capital structure, calculate your firm’s WACC (assume the corporate...

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Finance

Given the following information about your firm’s capitalstructure, calculate your firm’s WACC (assume the corporate taxrate is 35%). Debt Number of bonds outstanding = 12,000 price perbond = $1,165 par value per bond = $1,000 coupon rate = 6% (paidannually) Years to maturity = 10 Common Stock Number of sharesoutstanding = 1,000,000 Price per share = $25 Book value per share= $15 Beta = 1.4 Risk free rate = 4.5% Market risk premium = 5%

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3.6 Ratings (432 Votes)
Market value of debt 116512000 13980000Market value of equity 251000000 25000000Total firm value 13980000 25000000 38980000Weight of debt in the capital structure 1398000038980000 03586100 3586Weight of equity in the    See Answer
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Transcribed Image Text

Given the following information about your firm’s capitalstructure, calculate your firm’s WACC (assume the corporate taxrate is 35%). Debt Number of bonds outstanding = 12,000 price perbond = $1,165 par value per bond = $1,000 coupon rate = 6% (paidannually) Years to maturity = 10 Common Stock Number of sharesoutstanding = 1,000,000 Price per share = $25 Book value per share= $15 Beta = 1.4 Risk free rate = 4.5% Market risk premium = 5%

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