Question: please show work and do not put in excel . United Airlines is considering adding a new hub operation in Blue Lagoon. The finance group
. United Airlines is considering adding a new hub operation in Blue Lagoon. The finance group at UAL has gathered the following data. They have hired you as a Finance consultant to help them determine their cost of capital. Total terprise Value is $27 billion urrent stock market capitalization in $9 billion, shares are trading at $25 Debt was issued with a 4% coupon, and matures in 7 years Bonds similar to United's existing debt are current trading at 98.5 UAL pays a quarterly dividend of $.60, up from $.50 five years ago The current risk free rate is 1.5%, UAL's Beta is 1.5, the market premium is 7% . UAL pays a corporate tax rate of 21% a. What debt and equity weights will United use to calculate WACC? b. What Is United's cost of debt? c. What is United's cost of common equity? d. What is United's WACC
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