CGT Co.s stock is currently selling for $15.25 per share, and they have 10,000,000 shares outstanding. They
Fantastic news! We've Found the answer you've been seeking!
Question:
CGT Co.’s stock is currently selling for $15.25 per share, and they have 10,000,000 shares outstanding. They have $40,000,000 book value of 20-year, 9% coupon semiannual bonds outstanding (40,000 bonds at $1,000 par value). Each bond is selling for $930.41. The firm’s beta is 1.22, and the risk-free rate is 3.5%. Further, the required return on the market is 11.5%, and the firm’s tax rate is 25%
What is the after-tax cost of debt?
What is the firm’s cost of equity, based on the CAPM?
Find the firm’s weights of debt and equity, and find the resulting WACC.
Related Book For
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073212227
8th Edition
Authors: Ferdinand Beer, E. Russell Johnston, Jr., Elliot Eisenberg, William Clausen, David Mazurek, Phillip Cornwell
Posted Date: