Question: Problem Solving WACC. Equity Information. 50 million shares. $80 per share. Beta = 1.11. Market risk premium = 7%. Risk-free rate = 2%. Debt Information.

Problem Solving WACC. Equity Information. 50 million shares. $80 per share. Beta = 1.11. Market risk premium = 7%. Risk-free rate = 2%. Debt Information. $1 billion in outstanding debt (face value). Current quote = 108. Coupon rate = 9%, semiannual coupons. 15 years to maturity. Tax rate =35%. What is the cost of equity? [K] What is the before-tax cost of debt? [L] What is the WACC?[M]

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