Question: Hello please help me with this problem! Cougar Gold Mining Corporation (CGMC) has 3 million shares of common stock outstanding and 400,000 bonds with a
Hello please help me with this problem!
Cougar Gold Mining Corporation (CGMC) has 3 million shares of common stock outstanding and 400,000 bonds with a 8 percent coupon rate outstanding, par value $1,000 each. The common stock currently sells for $80 per share, and the bonds have 15 years to maturity and sell for 95 percent of par. The market risk premium is 6 percent, T-bills yield 1.5 percent, the beta coefficient for CGMC is 1.1, and the company's tax rate is 21 percent.
c.What is the cost of debt? (Hint: Using the bond valuation formula to find out YTM) I
d. If the company is evaluating a new investment project with the same risk as to the firm's typical project, what rate should the firm use to discount the project's cash flows? (Hint: What is the WACC for CGMC)? (
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