If wild widgets inc were an all-equity company it would, Ask an Expert

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If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.85. The company has a target debt-equity ratio of .3.

The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 6 percent.

The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 11 percent. The bond currently sells for $1, 280. 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93044500

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