1 david ortiz motors has a target capital structure of 35, Ask an Expert

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1. David Ortiz Motors has a target capital structure of 35% debt and 65% equity. The yield to maturity on the company's outstanding bonds is 11%, and the company's tax rate is 40%. Ortiz's CFO has calculated the company's WACC as 10.52%. What is the company's cost of equity capital? Round your answer to two decimal places.

2. You purchase a $450,000 town home and you pay 20 percent down. You obtain a 30-year fixed-rate mortgage with an annual interest rate of 6.5 percent. After five years you refinance the mortgage for 25 years at a 5.75 percent annual interest rate. After you refinance, what is the new monthly payment (to the nearest dollar)?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92762808

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