Find the market value of the bonds, Corporate Finance

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Pfizer Incorporated has 2 million shares of common stock, selling at $18 each. The β of the stock is 1.5, T-bill rate is 6%, and the expected return on the market is 12%. Pfizer also has $20 million (face amount) of bonds, with coupon 6%, which will mature after 8 years. The required rate of return for the bondholders is 10%. Find the market value of the bonds. The income tax rate of Pfizer is 40%. Find the WACC of Pfizer.

Answer: 12.27%


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