What is the companys cost of debt what is the companys


If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.7. The company has a target debt–equity ratio of .6. The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 5.7 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 10.4 percent. The bond currently sells for $1,250. The corporate tax rate is 34 percent. a. What is the company’s cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of debt % b. What is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity % c. What is the company’s weighted average cost of capital?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: What is the companys cost of debt what is the companys
Reference No:- TGS02762727

Expected delivery within 24 Hours