What is JUP WACC if the firm marginal tax rate

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Problem 1: Assume JUP has debt with a book value of $20 million, trading at 120% of par value. The bonds have a yield to maturity of 7% and a coupon rate of 10%. The firm's book value of equity is $16 million, and it has 2 million shares trading at $19 per share. The firm's cost of equity is 12%. What is JUP's WACC if the firm's marginal tax rate is 35%?

a) 7.29%

b) 10.03%

c) 9.12%

d) 9.57%

Reference no: EM132936928

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