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Calculate the proportion of debt and equity

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Reference no: EM132930701

Comprehensive Case- WACC

Equity Information

50 million shares

$80 per share

Beta = 1.15

Market risk premium = 9%

Risk-free rate = 5%

Debt Information

$1 billion in outstanding debt (face value)

Current quote = 110

Coupon rate = 9%, semiannual coupons

15 years to maturity

Tax rate = 40%

Problem 1: Calculate:

a. Cost of Equity

b. Cost of Debt

c. After tax cost of debt

d. Cost of capital

e. The proportion of debt and equity

Reference no: EM132930701

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