Suppose Bickel Tandoori Ovens Inc. currently has no debt: its beta = 1.3; the riskfree rate is .01; the expected equity risk premium is 6%; Bickel Tandoori Ovens Inc.'s tax rate = .2. What is its WACC?

2. Bickel Tandoori Ovens Inc. currently has 4 million shares outstanding with a price per share of $15. It currently has no debt: its beta = 1.3. Suppose Bickel Tandoori Ovens has decided to issue $30 million in debt (without changing the amount of equity outstanding). What is its new beta?


3. If Bickel Tandoori Ovens new debt is a 7-year zero coupon bond with a par value of $1000 and a price of $853, what is its yield to maturity?

4. After the new issue of debt, what is Bickel Tandoori Ovens' WACC?

Answer rating: 100% (QA)

1 To calculate the weighted average cost of capital WACC we need to consider the cost of equity and ... View the full answer