BTX Corp. is financed by both debt and equity. The company has 10 million shares of...

  

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BTX Corp. is financed by both debt and equity. The company has 10 million shares of ordinary equity outstanding. Currently selling for 30.25 per share. The ordinary equity has a beta of 1.08. They also have 800,000, 5 per cent preference shares outstanding that currently sell for 45 per share. BTX has 200,000 bonds outstanding that are selling at par (1,000) Equally risky bonds on the market are currently yielding 6.4 per cent The following information is also available The government T-bill is currently yielding 7 per cent, the rate of return on the market, R_m. is 11 per cent, and the corporate tax rate is 20 per cent. Required: Calculate the following a) The cost of ordinary equity for BTX b) The cost of preference shares for BTX c) The after-tax cost of debt for BTX d) The weighted average cost of capital (WACC) for BTX 5 marks 5 marks 5 marks 10 marks (Total 25 marks) BTX Corp. is financed by both debt and equity. The company has 10 million shares of ordinary equity outstanding. Currently selling for 30.25 per share. The ordinary equity has a beta of 1.08. They also have 800,000, 5 per cent preference shares outstanding that currently sell for 45 per share. BTX has 200,000 bonds outstanding that are selling at par (1,000) Equally risky bonds on the market are currently yielding 6.4 per cent The following information is also available The government T-bill is currently yielding 7 per cent, the rate of return on the market, R_m. is 11 per cent, and the corporate tax rate is 20 per cent. Required: Calculate the following a) The cost of ordinary equity for BTX b) The cost of preference shares for BTX c) The after-tax cost of debt for BTX d) The weighted average cost of capital (WACC) for BTX 5 marks 5 marks 5 marks 10 marks (Total 25 marks)