Question: Information Use the following information about Rex Inc. for problems 1-6. Common stock: 100,000 shares outstanding. $50 per share, beta=1.5 Bonds: 2,000 bonds outstanding, $1,000

Information

Use the following information about Rex Inc. for problems 1-6.

Common stock: 100,000 shares outstanding. $50 per share, beta=1.5

Bonds: 2,000 bonds outstanding, $1,000 face value each, 4% coupon paid semiannually, 21 years to maturity, market price of $995 per bond.

Market risk premium=5%, yield on 30 day Treasury Bill= 1%, effective tax rate = 21%

A) What is Rex Inc's Weight of Debt?

B) What is Rex Inc's Weight of Equity?

C) What is Rex Inc's Before Tax Cost of Debt?

D) What is Rex Inc's After Tax Cost of Debt?

E) What is Rex Inc's Cost of Equity?

F) What is Rex Inc's WACC?

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