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What is Surelock weighted average cost of capital

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Question - Surelock Homes Locksmiths has $100 million of bonds outstanding that have a coupon rate of 8%. Bonds of similar risk are yielding 9%. The company also has 10 million shares of common stock outstanding. The stock has a beta of 1.4 and sells for $50 a share. The book value of Surelock's equity is $100 million. U.S. Treasury bonds are yielding 4% and the market risk premium is 5%. Surelock's tax rate is 35%. What is Surelock's weighted average cost of capital?

Reference no: EM132955133

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