XYZ, Inc has $300 millions of shares outstanding trading at$20/share. The company has a beta...

XYZ, Inc has $300 millions of shares outstanding trading at $20/share. The company has a beta of 1.2 and the expected market is 8%. T bill rate is 2.5%. The company has $25 million in interest expenses and a book value of debt of $135 millions. The debt will mature in 12 years and it has a BB rating. The spread for a BB rating is 3.5% and the long term T Bonds yield 5%. The company has an effective tax rate of 35%.

a) What is the company's cost of equity?

b) What is its market value of equity?

c) What is the after tax cost of debt?

d) What is the market value of debt?

e) What is the company's WACC?

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jeff jeffy answered 1 year ago

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