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BTX Corp. isfinanced by both debt and equity. The company has10 million shares of ordinary...

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Finance

BTX Corp. isfinanced by both debt and equity. The company has10 million shares of ordinary equity outstanding. Currently selling for 30.25 per share. The ordinary equity has a beta of 1.08. They also have800,000, 5 per cent preference shares outstanding that currently sell for 45 per share.BTX has200,000 bonds outstanding that are selling at par (1,000). Equally risky bonds on the market are currently yielding 6.4per cent. The following information is also available. The government T-bill is currently yielding7 per cent, the rate of return on the market,R_m, is 11per cent, and the corporate tax rate is 20 per cent. Required: Calculate the following a) The cost of ordinaryequity for BTX 5 marks b) The cost of preferenceshares for BTX 5 marks c) The after-tax cost of debt for BTX 5 marks d) The weighted average cost of capital (WACC) for BTX

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