A) | The issue price per bond = 1000-40-35 = | $ 925 |
YTM (using an online calculator), with price | ||
of $925, n = 20, C = 11% (annual coupon) = | 12.00% | |
After tax cost of debt = 12%*(1-40%) = | 7.20% | |
B) | Current cost of preferred stock = 9/(100-10) = | 10.00% |
C) | Current cost of common stock (CAPM) = risk free rate+beta*(expected market retutn-risk free rate) = 4%+1.5*(12%-4%) = | 16.00% |
D) | Current WACC = 7.20%*30%+10%*20%+16%*50% = | 12.16% |
Eco Plastics Company Since its inception, Eco Plastics Company has been revolutionizing plastic and trying to...
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