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Calculate the weighted average cost of capital

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Question - The Toronto Skaters Company has a D/E ratio of 1.5. The company has 1,000 shares outstanding and a beta of 1.2. The risk-free rate is 3 percent and the market risk premium is 5 percent. The company has 10 year debt with a face value of $1 million and annual coupons of 4 percent. The debt is currently trading at 105. The tax rate is 35 percent. Calculate the weighted average cost of capital for the Toronto Skaters Company.

Reference no: EM131804699

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