Question: Answer the following questions given the information below: Equity Information 40 million shares $100 per share Beta = 1.15 Market risk premium = 8% Risk-free

  1. Answer the following questions given the information below:

Equity Information

40 million shares

$100 per share

Beta = 1.15

Market risk premium = 8%

Risk-free rate = 3%

Debt Information

$1 billion in outstanding debt (face value)

YTM = 9%

  1. What is the cost of equity?
  2. What is the cost of debt?
  3. What is the after-tax cost of debt?
  4. What are the capital structure weights?
  5. What is the WACC?

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