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What is the percentage of equity used by running shoes inc

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Reference no: EM132901135

Running Shoes, Inc. has 2 million shares of stock outstanding. The stock currently sells for $12.50 per share. The firms debt is publicly traded and was recently quoted at 90% of face value. It has a total face value of $10 million, and it is currently priced to yield 8%. The risk free rate is 2% and the market risk premium is 8%. You've estimated that the firm has a beta of 1.20. The corporate tax rate is 40%.

Problem 1: What is the percentage of equity used by Running Shoes, Inc.?

Reference no: EM132901135

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