What is the after-tax cost of equity financing

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Reference no: EM132015018

Komishito has 10,000 bonds and 400,000 shares outstanding. The bonds have a 10% annual coupon, $1,000 face value, $1,050 market value, and 10-year maturity. The beta on the stock is 1.30 and its price per share is $40. The risk- less return is 6%, the expected market return is 14%, and the firm’s tax rate is 40%.

a. What is the after-tax cost of debt financing?

b. What is the after-tax cost of equity financing?

c. What is the WACC?

Reference no: EM132015018

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