ABC Co. has 26 million shares outstanding trading at $18 per share. ABC also has $157 million

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ABC Co. has 26 million shares outstanding trading at $18 per share. ABC also has $157 million in outstanding debt. ABC has equity beta of 2. The expected market return is 7.3% and the risk-free rate is 1.0%.

Given that ABC has return on assets of 11.6%, find its cost of debt d%. How much is d?

Related Book For answer-question

Financial reporting, financial statement analysis and valuation a strategic perspective

ISBN: 978-0324789416

7th Edition

Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw

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Posted Date: Sep 01, 2023 07:31 AM

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ABC Co. has 26 million shares outstanding trading at $18 per share. ABC also has $157 million

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To find the cost of debt d for ABC Co you can use the following formula d R Rf1 T Wh... View the full answer

Financial reporting, financial statement analysis and valuation a strategic perspective

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