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What is the company capital structure

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Question - Brookfield Railway Ltd has 4 million shares outstanding with a current share price of $15, and the book value per share is $10. Brookfield also has two bond issues outstanding. The first bond issue has a face value of $20 million, a coupon rate of 5.0%, a yield to maturity of5.4% and sells for 97% of par. The second issue has a face value of $30 million, a coupon rate of 5.5%, a yield to maturity of 5.0% and sells for 102% of par. The first issue matures in10 years, while the second in 5 years. Assume the cost of equity is 12% and a tax rate of 30%.

a. What is the company's capital structure?

b. What is the company's WACC? The overall cost of debt is the weighted average of the two outstanding bonds.

Reference no: EM133011434

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