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Parole Co. has 77,910 bonds outstanding that are selling at par value. The bonds yield 8.5...

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Finance

Parole Co. has 77,910 bonds outstanding that are selling at parvalue. The bonds yield 8.5 percent. The company also has 5.4million shares of common stock outstanding. The stock has a beta of1.2 and sells for $46.3 a share. The U.S. Treasury bill is yielding3.5 percent and the market risk premium is 8.3 percent. Parole'stax rate is 32 percent. What is the firm's weighted average cost ofcapital? Enter answer in percents.

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Market Value of Debt and Equity Market Value of Debt 77910000 77910 Bonds x 1000 per Bond Market Value of Equity 250020000 5400000 Common shares x 4630 per share Total Market    See Answer
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Parole Co. has 77,910 bonds outstanding that are selling at parvalue. The bonds yield 8.5 percent. The company also has 5.4million shares of common stock outstanding. The stock has a beta of1.2 and sells for $46.3 a share. The U.S. Treasury bill is yielding3.5 percent and the market risk premium is 8.3 percent. Parole'stax rate is 32 percent. What is the firm's weighted average cost ofcapital? Enter answer in percents.

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