C6 A Company has 3,500 bonds outstanding with 10 years to maturity. These bonds have...
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C6 A Company has 3,500 bonds outstanding with 10 years to maturity. These bonds have a $1000 face value, a 9 percent coupon (per annum). The bonds are quoted at 100 percent of their face value. The Company has 1,400,000 shares outstanding. The book value per share is $ 14 while the market price is $24 per share. The Company has the leverage beta of 1.32 and faces a tax rate of 24%. The market quotations show that the Company's share price rose 27% last year and analysts expect 24% growth in the next years. The main stock index on this capital market performs 16% yearly and T-Bond rate is 3.5%. Calculate the cost of common stock equity using the capital asset pricing model (CAPM), the cost of debt (after tax), and the weighted average cost of capital (WACC) for this Company. The Company's cost of common equity is equal % The Company's cost of debt after tax is equal: I _% The Company's weighted average cost of capital is equal
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