Finance Question

timer Asked: Oct 23rd, 2018
account_balance_wallet $40

Question Description

Your firm has 10 million shares outstanding, with $10 per share. The firm's debt represents 30% of the capital structure, and the average yield to maturity is 10%. We assume a corporate tax rate of 30%. The market rate of return is 10%. The risk free rate is 2%.The standard deviation are 8% for the market, and 1% for your firm.

a) What is the market value of the company's debt?

b) What is the cost of debt in percentage?

c) What is the firm's weighted average cost of capital?

Tutor Answer

School: UT Austin

Hey! There you go. All the best



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Goes above and beyond expectations !

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