David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 25%. Ortiz's CFO has calculated the company's WACC as 10.5%. What is the company's cost of equity capital? Round your answer to the nearest whole number. _________ %

David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company's outstanding bonds is 9%, and the company's tax rate is 25%. Ortiz's CFO has calculated the company's WACC as 10.5%. What is the company's cost of equity capital? Round your answer to the nearest whole number. _________ %

Foundations of Business (MindTap Course List)

6th Edition

ISBN:9781337386920

Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Chapter15: Using Management And Accounting Information

Section15.8B: Financial Ratios

Problem 1CC

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