What is the cost of equity

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Running Shoe, Inc has 2 million shares of stock outstanding. It currently sells for $12.50 a share. The firm's debt is publicly traded and was recently quoted at 90% face value. It has a total face value of $10M and is currently priced to yield 8%. Risk free rate = 2%. Market risk premium = 8%. Beta = 1.2. Tax rate = 40%.

  1. What is the cost of equity?
  2. What is the percentage of equity used by the firm?
  3. What is the WACC?

Reference no: EM131908156

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