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Indicate which bond and equity numbers you used

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Reference no: EM132951997

Question - Weighted Average Cost of Capital - Ravenswood Corporation has the following numbers on its Audited Balance Sheet:  outstanding debt of $450,000 and common equity of $900,000.  The debt has a current market value of $400,000.  The company's equity has a market value of $1,050,000. Assume that the cost of equity is 9.0% and the yield to maturity on the debt is 7.0 % The relevant tax rate is 21%.

Indicate which bond and equity numbers you used in these calculations and the rationale that supports your selection.

Reference no: EM132951997

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