(Weighted Average Cost of Capital) AnimalKing has a capital structure with 30% debt and 70% common...

(Weighted Average Cost of Capital) AnimalKing has a capital structure with 30% debt and 70% common stock. A debt issue of $1,000 face value with 12% coupon bonds, maturing in 15 years paying semiannual interest, will sell for $1,122.35. The cost of equity for the company is based on the CAPM and the following information: beta of 1.1, risk free treasury rate of 3% and market rate of 9%. What is AnimalKing’s cost of capital given a 20% tax rate?

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jeff jeffy answered 2 years ago

Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no...

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