What is the percentage of company that is financed by debt

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Question - The opportunity cost of capital is a representation of the "effective interest rate" that someone experiences when they choose to invest their money into a project or real assets. -A company has 45 million euros worth of debt for which it must pay 6% interest. It has also issued shares, and it currently has 10 million shares outstanding. These shares trade at 5.50€ per share, and the shareholders demand a required return of 12%. The company is located in Chile, where the government has reduced the corporate tax rate to 10% in response to the global CoViD pandemic.

What is the percentage of the company that is financed by debt?

What is the percentage of the company that is financed by equity?

For the company described in question, what is Opportunity Cost of Capital for this company?

Reference no: EM133144060

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