What is south american airlines cost of equity

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Reference no: EM132007508

South American Airlines' (SAA) shares are currently trading at $69.25 each. The yield on the company’s debt is 4% and the firm's beta is 0.7. The T-Bill rate is 4% and the expected return on the market (E (kM)) is 9%. The company's target capital structure is 25% debt and 75% equity. The company pays a combined income tax rate of 35%. The GST rate is 13%. What is SAA’s cost of equity? Using the information outlined in #11, calculate SAA’s cost of debt (after tax).

Reference no: EM132007508

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