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Question: A corporation has 10,000 bonds outstanding with a 6% annual coupon rate and 8 years to maturity. Each bond has a $1,000 face value and a $1,100 market price.

The company's 1,250,000 shares of common stock sell for $10 per share.

The company will pay $1.2/share in dividend next period, the steady growth of dividend

4%/period is expected to last infinitely.

Tax rate is 40%.

1. What is the company's cost of debt?

2. What is the company's cost of equity?

3. What is the company's weight of debt and equity?

4. What is the company's WACC?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92800401

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