Answer to Fiance questions

Use the following data to answer questions:

Company issued 240,000 bonds with $1k face value with 7.5% coupons with yearly payments. 20 yrs. to maturity,& currently sells for $940.  The Marginal tax rate is 40%. Equity is 9M shares, selling for $71@share, beta is 1.2, risk free rate 1%,& market risk premium is 10%.

A. What percent of the company’s financing is debt?

B. What percent of the company’s financing is equity?

C. What is the  after-tax cost of debt?

D. What is the cost of equity?

E. What is the company’s weighted average cost of capital?


 
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