A firm has 40,000 shares whose current price is$80.75.
Chapter , Problem 15-6(choose chapter or problem)
A firm has 40,000 shares whose current price is$80.75. Those stockholders expect a return of 15%.The firm has a 2-year loan of $900,000 at 6.4%. Ithas issued 12,500 bonds with a face value of 1000,15 years left to maturity, semiannualcompounding,a coupon interest rate of 6%, and a current priceof $1090. Using market values for debt and equity,what is the firms cost of capital:(a)Before taxes?(b)After taxes with a tax rate of 40%?
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