problems 5 and 6 are related

Using Capital Asset Pricing Model (CAPM) to recalculate Company A's cost of equity. Then, find the MAXIMUM cost of debt for Company A above to borrow money. You have to use the same WACC you calculated from Problem 5 above to do this problem. 10-year Treasure Bond Annual Rate of Return = 3.00% Stock Beta value = 1.25 S&P 500 Index Expected annual rate of return = 10% Marginal Income Tax Rate = 35% Proportion of Debt to Total Capital = 60% a. 6.10% b. 5.25% C. 5.78% d. 7.05% a. 0.84 b. 1.36 di 1.06 d. 11.28 Problem 5 Company A's cost of capital information is as follows: Stock price per share 130 Expected Dividends to be paid Expected growth rate 2% Debt to total captial ratio = Margin tax rate 35% Cost of debt Calculate Company A's after tax WACC. a. 6.10% b. 7.35% 6.75% 13 60% 6% d. 6.95% Problem 6 I Name: # Using Capital Asset Pricing Model (CAPM) to recalculate Company A's cost of equity. Then, find the MAXIMUM cost of debt for Company A above to borrow money. You have to use the same WACC you calculated from Problem 5 above to do this problem. 10-year Treasure Bond Annual Rate of Return 3.00% Stock Beta value = 1.25 S&P 500 Index Expected annual rate of return 10% Marginal Income Tax Rate = 35% Proportion of Debt to Total Capital 60% a. 6.10% b. 5.25% c. 5.78% d. 7.05%