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What is the yield to maturity on BZ outstanding debt

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Question 1 - BAK Inc. has a market capitalization of $688 million and a market value of debt of $347 million. According to CAPM, BAK's cost of equity capital is 7.3% and BAK's outstanding bonds have an average yield of 5.8%. BAK's tax rate is 26%. What is BAK's weighted average cost of capital?

Question 2 - BZ Inc's weighted average cost of capital is 6%. The company has a market capitalization of $858.2 million and carries debt of $367.2 million. BZ's beta is 1.1 and the tax rate it faces is 26%. The 10-year US Treasury Bond has a yield of 1.7% and the market risk premium is estimated to be 5.4%. What is the yield to maturity on BZ's outstanding debt?

Reference no: EM133076370

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