If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.10. The...

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If Wild Widgets, Inc., were an all-equity company, it would havea beta of 1.10. The company has a target debt-equity ratio of .75.The expected return on the market portfolio is 11 percent andTreasury bills currently yield 3.6 percent. The company has onebond issue outstanding that matures in 29 years, a par value of$2,000, and a coupon rate of 6.3 percent. The bond currently sellsfor $2,100. The corporate tax rate is 22 percent.
a. What is the company’s cost of debt? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)
b. What is the company’s cost of equity? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)
c. What is the company’s weighted average cost of capital? (Donot round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)

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Answer a Face Value 2000 Current Price 2100 Annual Coupon Rate 630 Annual Coupon 630 2000 Annual Coupon 126 Time to Maturity 29 years Let Annual YTM be i See Answer

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If Wild Widgets, Inc., were an all-equity company, it would havea beta of 1.10. The company has a target debt-equity ratio of .75.The expected return on the market portfolio is 11 percent andTreasury bills currently yield 3.6 percent. The company has onebond issue outstanding that matures in 29 years, a par value of$2,000, and a coupon rate of 6.3 percent. The bond currently sellsfor $2,100. The corporate tax rate is 22 percent.a. What is the company’s cost of debt? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)b. What is the company’s cost of equity? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)c. What is the company’s weighted average cost of capital? (Donot round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)