You have been given the following information for Azure Inc.:

• Common Stock:10million shares outstanding, $15per share market price, Beta = 1.25
• PreferredStock:2 million shares outstanding, $8per share market price,$10 per sharepar value, annual preferred dividend rate= 7.5%
• Bonds: 20,000 bonds outstanding, $1,000 face value each,semi-annualcoupons,5%couponrate, 10 years to maturity, YTM= 5.8%
• Expected return on market= 12%, risk-free rate = 3%

1. Calculate Azure Inc.'s cost of debt, cost of common equity and cost of preferred shares.

1. Calculate Azure Inc.'s market value of Bonds, Common shares and Preferred shares.

3. Calculate Inc.'s WACC

Answer rating: 100% (QA)

Azure Incs Capital Costs and Weights 1 Cost of Debt Since the bonds are not publicly traded we need to use the Yield to Maturity YTM as the approximat... View the full answer