You are given the following information on Norne Corporation: Debt 9360,000 corporate bonds with $1000...
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Finance
You are given the following information on Norne Corporation:
Debt 9360,000 corporate bonds with $1000 par value and a current price of $1040 the bonds have a 7.2% coupon, pay interest semiannually and have Yield to maturity of 6%
Equity : Market value of stock equals 14512,500 and shares of common stock selling at $64.5 per share, the stock has a beta of 0.85
Market The expected return on the market is 12% , and the risk free rate is 5%
If the tax rate for norne is 25%
A) Calculate the after-tax cost of debt for Norne
B) Calculate the cost of equity for Norne
C) Calculate the weighted average cost of capital for Norne.
D) Calculate the Weighted Average cost of Capital for the company.
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