What is Sheridan Cyclicals cost of common equity capital

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Question - You are analyzing the after-tax cost of debt for a firm. You know that the firm's 12-year maturity, 13.50 percent semiannual coupon bonds are selling at a price of $1,164.40. These bonds are the only debt outstanding for the firm. What is the current YTM of the bonds?

You know that the return of Sheridan Cyclicals common shares is 1.7 times as sensitive to macroeconomic information as the return of the market. If the risk-free rate of return is 3.50 percent and market risk premium is 5.71 percent, what is Sheridan Cyclicals' cost of common equity capital?

Reference no: EM132994311

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