Company market value debt to equity ratio

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A company’s book value of equity is $200 million, and its book value cost of equity is 20%. It has 2 million shares outstanding with a price per share of $125. Its beta is 1.35. The risk free rate is 2.25% and the return on the market is 18.50%. The company also has two bonds. The book value of bond 1 is $65 million and its coupon rate is 9%. The book value of bond 2 is $35 million and its coupon rate is 12%. The current yield to maturity for bond 1 is 12% and the current yield to maturity for bond 2 is 10%. Bond 1’s price is $940 and bond 2’s price is $1,025. The company’s tax rate is 35%. 21. Calculate the company’s market value debt to equity ratio.

Reference no: EM131554720

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