Homework Answers
1. The correct answer will be option c i.e. yield to maturity
2. The firm's WACC is computed as shown below:
= YTM ( 1 - tax rate ) x debt weight + return on equity x weight of equity
= 0.06 ( 1 - 0.35 ) x 0.18 + 0.115 x 0.82
= 10.13% Approximately
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is question 1 correct and how do you do question 2?
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