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Compute the After Tax Cost of Debt of the firm

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Question - Suppose a firm has 39.20 million shares of common stock outstanding at a price of $19.96 per share. The firm also has 160000.00 bonds outstanding with a current price of $1,000.00. The outstanding bonds have yield to maturity 6.09%. The firm's common stock beta is 1.77 and the corporate tax rate is 40.00%. The expected market return is 9.36% and the T-bill rate is 4.14%.

Required -

1. Compute the Weight of Equity of the firm.

2. Compute the Weight of Debt of the firm.

3. Compute the Cost of Equity of the firm.

4. Compute the After Tax Cost of Debt of the firm.

5. Compute the WACC for the Firm.

Reference no: EM132745946

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