Santiago after-tax cost of debt

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Q 1. Jake Corporation is a fast growing company, with projected free cash flows (FCFs) during the next two years of $10 million and $20 million respectively. After two years, the FCF is expected to grow at a constant 6% rate. Jake's WACC is 10%, and the company has $50 million dollars in debt and 5 million shares.

a. What is the firm's equity value?

b. What is the price per share?

Q 2. Santiago Enterprises' currently outstanding 10-year 4% annual coupon bonds have price $922.78. The company's marginal tax rate is 35%. What is Santiago's after-tax cost of debt?

Reference no: EM131520024

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