The market value of Stan Company's equity is P15 million, and the market value of its risk free debt is P5 million. If the required rate of return on the equity is 20% and that on the debt is 8%, calculate the company's cost of capital. (Assume no taxes.) (round your answer to the nearest whole number)
The market value of Stan Company's equity is P15 million, and the market value of its risk free debt is P5 million. If the required rate of return on the equity is 20% and that on the debt is 8%, calculate the company's cost of capital. (Assume no taxes.) (round your answer to the nearest whole number)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter17: Dynamic Capital Structures And Corporate Valuation
Section: Chapter Questions
Problem 2P
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The market value of Stan Company's equity is P15 million, and the market value of its risk free debt is P5 million. If the required
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