I need assistance with the following Finance questions: Please show me a step-by-step solution.
Problem: Juanita's Steak House has $12,000 of (perpetual) debt outstanding that is selling at par and has a coupon rate of 8%. The tax rate is 34%. What is the present value of the tax shield?
The Tip-Top Paving Co. has a beta of 1.11, a cost of debt of 11% and a debt to value ratio of 0.6. The current risk free rate is 9% and the market rate of return is 16.18%. What is the company's cost of equity capital?