What is the weighted-average cost of capital for kilborn


Kilborn Corporation’s balance sheet is shown below. The current rate on treasury bonds is 7%. The yield to maturity on Kilborn’s bonds is 10%. Assume a market risk premium of 8%. Kilborn’s tax rate is 40%. Kilborn’s stock price is $45, and it has 2 million shares outstanding. Kilborn’s beta is unknown because it only recently went public, but it is known that a comparable firm’s stock has a beta of 1.2 and that the comparable firm’s debt ratio (D/(D+E)) is 0.4. What is the weighted-average cost of capital for Kilborn Corporation?

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Financial Management: What is the weighted-average cost of capital for kilborn
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