HiLens Corp. is evaluating a new project that has the same risk as that of the...

  

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HiLens Corp. is evaluating a new project that has the same risk as that of the firm. HiLens currently has 8 million shares of common stock outstanding with a stock price of $65 per share with a beta of 1.20 and 200,000 bonds outstanding, with a coupon rate of 6%, par value $1,000 4each, 20 years to maturity and the bonds make semi-annual interest payments. Bonds are currently strading at 106 percent of par. The market risk premium is 7 percent and the risk-free rate is 3%. Corporate tax rate is 24%. What rate should the company use to evaluate this project? Calculate this rate. 11 HiLens Corp. is evaluating a new project that has the same risk as that of the firm. HiLens currently has 8 million shares of common stock outstanding with a stock price of $65 per share with a beta of 1.20 and 200,000 bonds outstanding, with a coupon rate of 6%, par value $1,000 4each, 20 years to maturity and the bonds make semi-annual interest payments. Bonds are currently strading at 106 percent of par. The market risk premium is 7 percent and the risk-free rate is 3%. Corporate tax rate is 24%. What rate should the company use to evaluate this project? Calculate this rate. 11

Answer rating: 100% (QA)

To calculate the rate that HiLens Corp should use to evaluate the new project we need to determine t... View the full answer