Company D has 2 million shares of stock outstanding currently selling at $25 per share, and an issue of $40 million in 4.5% annual coupon bonds with a maturity of 12 years selling at 102% of par. If company D’s weighted-average tax rate is 20%, and the cost of equity is 12%, what is Company D’s Weighted Average Cost of Capital (WACC)?
Company D has 2 million shares of stock outstanding currently selling at $25 per share, and an issue of $40 million in 4.5% annual coupon bonds with a maturity of 12 years selling at 102% of par. If company D’s weighted-average tax rate is 20%, and the cost of equity is 12%, what is Company D’s Weighted Average Cost of Capital (WACC)?
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 7P
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Company D has 2 million shares of stock outstanding currently selling at $25 per share, and an issue of $40 million in 4.5% annual coupon bonds with a maturity of 12 years selling at 102% of par. If company D’s weighted-average tax rate is 20%, and the
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