You found out that the corporation assets are currently valued at $150, and that the face value of its debt is $60, which matures in 5 years. Volatility forecast models show that the varance of traded equity of the corporation is 0.16. Assuming that the risk-free rate is 2% and market risk premium of 6%,and the corporation has a CAPM beta of 1.6. what is the cost of debt?

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Step 1 Calculation of cost of Equity Cost of Equity As p... View the full answer