Calculate evans weighted average cost of capital

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Question - Evan has 15 million shares outstanding trading for $12 per share. The equity beta is 1.7. In addition, Luca has $120 million outstanding bonds. These bonds are 3-year bonds with a 4% coupon rate and semiannual coupons. The bonds are trading at the price of $966 per $1,000 face value. The default rate of these bonds is 2.1%. The bondholders' expected loss rate in the event of default is 56%. The risk-free rate is 2% and the market risk premium is 6.7 %. The tax rate is 30%. Calculate Evans weighted average cost of capital.

Reference no: EM132798074

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