Nozama Online Limited has 10 million shares of common stock outstanding. The current share price is $40
Question:
Nozama Online Limited has 10 million shares of common stock outstanding. The current share price is $40 per share. The dividend one year from today is expected to be $4 and the growth rate is -2%.
Nozama also has a bond issue outstanding, which is maturing in 10 years, has a face value of $200 million, 6% coupon payable annually, and sells for 107.7217% of the face value.
Nozama also has 2,000,000 preferred shares outstanding, which are currently selling for $80 per share and pay a dividend of $4.48 per year.
The corporate tax rate is 40%. Determine the weighted average cost of capital?
WeLoveDebt Inc. has a target debt/equity ratio of 3, weighted average cost of capital of 9% and the corporate tax rate of 40%.
1. If cost of equity is 16% then what is the pretax cost of debt?
2. If instead you know before tax cost of debt is 12%, what is the cost of equity?
3. What is the unlevered cost of equity?
Materials Science and Engineering An Introduction
ISBN: 978-0470419977
8th edition
Authors: William D. Callister Jr., David G. Rethwisch