Assume that your firms marginal tax rate is 35 and that, Ask an Expert

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Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure:

Bonds

coupon rate = 6%

yield-to-maturity = 5.5%

Market value of bonds = $25 million

Book value of bonds = $30 million

Common stock

Book value of common shares = $25 million

Market value of common shares = $50 million

Required rate of return (r) = 10.5%

What is your firm’s Weighted Average Cost of Capital (report as a raw number, i.e. if it is 10.43%, plug in 10.43) ?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92361180

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