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What is the cost of equity

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1. Western Bakeries just paid its annual dividend of $.64 a share. The stock has a market price of $16.35 and a beta of .83. The return on the U.S. Treasury bill is 2.9 percent and the market risk premium is 7.4 percent. What is the cost of equity?

2. Increase Corp. is trying to determine its cost of debt. The firm has a debt issue outstanding with 13 years to maturity that is quoted at 105.2 percent of face value. The issue makes semiannual payments and has a 6 percent annual coupon rate. What is the aftertax cost of debt if the tax rate is 21 percent?

Reference no: EM133111689

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