What is the cost of equity for pacific stars

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Point 1: The company has 80,000 shares of common stock outstanding at a current market price of $20 per share. The stock has a beta of 1.2. The market risk premium is 6% and the risk-free rate is 3%.

Point 2: The companty has 2000 bonds outstanding, with 6% coupon and 20 years to maturity. The bond is currently selling for $1,103.8, with a yteld-to-maturity of 5%.

Point 3: The tax rate for the company is 20%

a) What is the cost of equity for Pacific Stars?

b) What is the weighted average cost of capital (WACC) for Pacific Stars?

Reference no: EM132519601

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