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You are given the following information for Eastern Valley Inc. find out WACC

Tax Rate: 35%

Debt: 4000 Bonds outstanding (coupon rate of 7%, paid semi annually) with current yield to maturity of 8%. The Bonds have a par value

of $1,000 and are currently selling at 103% of par value.

Stocks: 90,000 shares outstanding, selling for $57 per share; beta is 1.10

Market: 8% market risk premium and 6% risk-free rate

Hint: You will have to use the market values to find the weights; Not all information this is given will be required to solve the problem.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M948903

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