In: Finance
Calculate the cost of capital for Odorf Inc. given the following
information. Common equity: Number of shares outstanding = 1
million
Share Price = $1.50
Beta = 1.5
Debt:
Number of bonds = 1,000
Bond price = $948.54
Coupon rate = 10% paid annually
Maturity = 8 years
T-bill rate = 5%
Market return = 16%
Marginal tax rate = 0.35