Use the following data for securities issued by vandelay, Ask an Expert

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Use the following data for securities issued by Vandelay Industries to answer questions

Bonds: The company issued 240,000 bonds. The bonds have a $1,000 face value with 7.5% coupons with annual payments, 20 years to maturity, and currently sell for $940. The marginal tax rate is 40%.

Equity: The company has 9,000,000 shares of (common) stock outstanding, selling for $71 per share. The company’s beta is 1.2, the risk free rate is 1%, and the market risk premium is 10%.

a. What percent of the company’s financing is debt?

b. What percent of the company’s financing is equity?

Walk me through this problem step by step or write the formula with the numbers filled in.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92368021

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