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What is the company cost of equity capital

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Question 1

Bond A pays 7.5% semi-annual coupon interest, with RM810.50 market value and 15 years remaining to maturity. Bond B pays 8.2% semi-annual coupon interest, RM860.25 market value, with 10 years remaining to maturity. Which bond offers a higher yield-to-maturity? Assume the par value be RM1,000

Question 2

David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and the company's tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.96 percent. What is the company's cost of equity capital?

Reference no: EM132994789

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