Question: Topic Covered: Long-term Financing Decisions Notes in answering: 1.Do not round off anytime during the computation. 2. Final answers must be written in percent and

Topic Covered: Long-term Financing Decisions

Notes in answering: 1.Do not round off anytime during the computation. 2. Final answers must be written in percent and rounded to FIVE decimal places.

How much is the cost of the ordinary shares according to the bond yield plus risk premium approach? Return on treasury bonds 5% Return on ABC Corporate bonds 8% ABC Corporation beta 1.3 ABC Corporation required risk premium above bonds 6% Market risk premium 9%

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