If Wild Widgets, Inc., were an all-equity company, it would have a beta of .90....
60.1K
Verified Solution
Link Copied!
Question
Finance
If Wild Widgets, Inc., were an all-equity company, it would have a beta of .90. The company has a target debt-equity ratio of 45. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 2.9 percent. The company has one bond issue outstanding that matures in 20 years, a par value of $1,000, and a coupon rate of 5.9 percent. The bond currently sells for $1,045. The corporate tax rate is 22 percent. a. What is the company's cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) calculations and enter your answer as a percent rounded to 2 decimal places, e.g., b. What is the company's cost of equity? (Do not round intermediate calculations and c. What is the company's weighted average cost of capital? (Do not round intermediate 32.16.) a. Cost of debt b. Cost of equity c. WACC
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
