The risk free rate on treasury bills

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Action Inc. has $80 million in debt and 60% of its capital structure consists of common equity. The firm has no preferred stock. The firm’s bonds have a coupon rate of 9% and YTM of 8.5%, and the firm is subject to a 30% corporate tax rate. The firm has common stock with a beta of 1.25. The risk free rate on Treasury bills is 4% and the expected market risk premium is 10%. What is the minimum after-tax rate of return that Action must earn on its investments?

Reference no: EM131543547

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