Number of equity shares outstanding: 10 million Current stock price per share: $400 Short term debt on

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Number of equity shares outstanding: 10 million

Current stock price per share: $400

Short term debt on balance sheet: $0

Long term debt on balance sheet:$2,000

Equity on balance sheet: $1,500

Number of bonds issued: 20 million

Current price for each bond: $90

Coupon Rate of Bonds: 6%

Bonds Rating: B (Avg Debt Beta = 0.26)

Tax Rate: 35%

Question: The firm has zero excess cash. Suppose the risk-free rate is 2% and expected market return is 6%, then the firm's WACC minus its asset cost of capital equals ___%

Related Book For answer-question

Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Posted Date: Mar 04, 2024 01:10 PM

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Number of equity shares outstanding: 10 million Current stock price per share: $400 Short term debt on

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The firms WACC minus its asset cost of capital equals 10325Heres the calculation Calcula... View the full answer

Corporate Finance

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