A Company ABC Ltd. has 2 million shares outstanding. The stock currently sells for $20 per...
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A Company ABC Ltd. has 2 million shares outstanding. The stock currently sells for $20 per share. Treasury bill rate is 4 percent, and the expected market returns are 12 percent. You've estimated that the company has twice the systematic risk as market. The firm's debt is publicly traded and the bond trades at par. There are 20,000 bonds outstanding. The bond has a coupon rate of 10% paid semiannually. The corporate tax rate is 20 percent. Calculate the weighted average cost of capital. A Company ABC Ltd. has 2 million shares outstanding. The stock currently sells for $20 per share. Treasury bill rate is 4 percent, and the expected market returns are 12 percent. You've estimated that the company has twice the systematic risk as market. The firm's debt is publicly traded and the bond trades at par. There are 20,000 bonds outstanding. The bond has a coupon rate of 10% paid semiannually. The corporate tax rate is 20 percent. Calculate the weighted average cost of capital.
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To calculate the weighted average cost of capital WACC for ABC Ltd we need to consider the cost of e... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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