You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources...
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You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources of long-term capital. The companys marginal tax rate is 25%.
First, there are 207,500 shares of common stock, which are currently selling for $39.93. You estimate that the firms Beta is 0.75. The current return on short-term T-Bill is 2.25%, and you expect the long-term return on the stock market to be about 9.75%.
Second, there is an issue of 4,500 coupon bonds with a face value of $1,000, which pays 5.10% (annual) coupons, and mature in fourteen years. These bonds are currently trading for $950.
Calculate the yield-to-maturity on the companys bonds.
Group of answer choices 5.10% 4.75% 5.75% 5.63% 
Question? 25 pls osms. ons: a ine
You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources of long-term capital. The companys marginal tax rate is 25%.
First, there are 207,500 shares of common stock, which are currently selling for $39.93. You estimate that the firms Beta is 0.75. The current return on short-term T-Bill is 2.25%, and you expect the long-term return on the stock market to be about 9.75%.
Second, there is an issue of 4,500 coupon bonds with a face value of $1,000, which pays 5.10% (annual) coupons, and mature in fourteen years. These bonds are currently trading for $950.
Calculate the yield-to-maturity on the companys bonds.
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