What is after-tax cost of debt and cost of equity

Assignment Help Financial Management

Reference no: EM131863083

ABC Incorporated shares are currently trading for $32 per share. The firm has 1.13 billion shares outstanding. The market value of the firm’s debt is $2 billion. The 10-year Treasury bond rate is 6.25%. ABC as an outstanding credit rating and has earned a AAA rating from the major credit rating agencies: the current yield on AAA bonds is 6.45%. The historical equity market risk premium is 5.5%. ABC’s equity beta is estimated to be 1.1, and its marginal tax rate (including federal, state, local, and international taxes) is 40%.

a. What is ABC’s cost of equity?

b. What is ABC’s after-tax cost of debt?

c. What is ABC’s WACC?

Reference no: EM131863083

Questions Cloud

Define different forms of legal structures : Define each of these different forms of legal structures: sole proprietorship, partnership, corporation, S corporation, and LLC.

Total inventory management costs of post card inventory : What is the annual total inventory management costs of post card inventory?

Retire bonds outstanding : Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2027, to retire bonds outstanding.

What is the value of the firm : The firm’s weighted average cost of capital is 10%. What is the value of the firm?

What is after-tax cost of debt and cost of equity : ABC Incorporated shares are currently trading for $32 per share. What is ABC’s cost of equity? What is ABC’s after-tax cost of debt?

What is annual ordering cost of the post card inventory : The carrying cost is $0.12 per post card per year. The ordering cost is $471 per order. What is the annual ordering cost of the post card inventory?

Debt outstanding with market value : Joe’s Party Supply, Inc., currently has debt outstanding with a market value of $30.5 million and a yield to maturity of 6%.

What is the annual carrying costs of post card inventory : The ordering cost is $200 per order. What is the annual carrying costs of post card inventory.

Completed the purchase of new dell computers : Dubois Inc. has completed the purchase of new Dell computers. The report file must reveal the formulas that you create when a specific cell is clicked.

User Account

All Pages