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Calculate spp weighted average cost of capital

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Problem 1: The capital structure of SPP, Inc. consists of 45% debt and 55% equity. SPP has 2,000,000 shares outstanding a share price of $20 per share. SPP's only outstanding bond issue pays coupons at 5% and has a yield-to-maturity of 6%. Government bonds are yielding 3%. The market risk premium is 6%. SPP's tax rate is 35%. Calculate SPP's weighted average cost of capital (WACC).

Reference no: EM132619092

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