Question: please answer questions 1-4 please ! 2. Cost of capital (30). Please provide the simple reason of your key decisions Today is December 20, 2020
2. Cost of capital (30). Please provide the simple reason of your key decisions Today is December 20, 2020 A US company Aaron Athletics Company's capital structure consists of debt and common stock. The company uses the CAPM to estimate its cost of common equity, Aaron Athletics Historic Beas: Average beta from 2010 to 2019:1.48 2020 YTD (1/1/2020-12/20/2020) 1.36 Historical SAPSOO Market Return Arithmetic average return (1990-2020): 13.2% Geometrie (Compound annuaired) average rate of return (1990-2020): 10.32% Historical FTST 100 Index Market retum Arithmetic average return (1990-2020): 11.35 Geometric (Compound anulired) average rate of return (1990-2020) 9.93% Historical Aaron Athletics Market Retum Arithmetic average return (1990-2020): 15.6% Geometric (Compound ammuslined) average rate of return (1990-2020)-12.24% Currently, Aaron Athletics" stock price is 590, with a total number of 3 million shares outstanding The current 20-yeur Treasury bond is 23 The current average yield for the AAA nating corporate bonds is 5% The company's average effective tax rate is 35% Current Yield on publicly trade Aaron Athletics bond which has an AAA rating Coupon 7% (paid annually), 10 years to maturity Current bond price 594 for the face value of $100 Current value of bond is 594,000,000 1) Find the company's cost of equity (cost of stock) 2) Find the company's weight of debt 3) Find the company's weight of equity 4) Find the company's WACC 2. Cost of capital (30). Please provide the simple reason of your key decisions Today is December 20, 2020 A US company Aaron Athletics Company's capital structure consists of debt and common stock. The company uses the CAPM to estimate its cost of common equity, Aaron Athletics Historic Beas: Average beta from 2010 to 2019:1.48 2020 YTD (1/1/2020-12/20/2020) 1.36 Historical SAPSOO Market Return Arithmetic average return (1990-2020): 13.2% Geometrie (Compound annuaired) average rate of return (1990-2020): 10.32% Historical FTST 100 Index Market retum Arithmetic average return (1990-2020): 11.35 Geometric (Compound anulired) average rate of return (1990-2020) 9.93% Historical Aaron Athletics Market Retum Arithmetic average return (1990-2020): 15.6% Geometric (Compound ammuslined) average rate of return (1990-2020)-12.24% Currently, Aaron Athletics" stock price is 590, with a total number of 3 million shares outstanding The current 20-yeur Treasury bond is 23 The current average yield for the AAA nating corporate bonds is 5% The company's average effective tax rate is 35% Current Yield on publicly trade Aaron Athletics bond which has an AAA rating Coupon 7% (paid annually), 10 years to maturity Current bond price 594 for the face value of $100 Current value of bond is 594,000,000 1) Find the company's cost of equity (cost of stock) 2) Find the company's weight of debt 3) Find the company's weight of equity 4) Find the company's WACC
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