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Calculate the weights for ubc equity and debt

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Reference no: EM132740471

UBC has 2 million shares of common shares outstanding. The stock sells at $25 per share. The firm's debt is publicly traded and was recently quoted at 95% of the face value. It has a total face value of $8 million, and its yield to maturity is 11%. The risk-free rate is 6%, and the market risk premium is 7%. The firm's beta is 1.8 and the corporate tax rate is 35%.

Problem 1) Calculate the weights for UBC's equity and debt based on their market values.

Problem 2) What is the cost of equity capital for UBC?

Problem 3) Given the information above, what is the weighted average cost of capital (RWAcc) for UBC?

Reference no: EM132740471

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