If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.10. The company has a target debt-equity ra

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If Wild Widgets Inc Were An All Equity Company It Would Have A Beta Of 1 10 The Company Has A Target Debt Equity Ra 1 (107.29 KiB) Viewed 35 times

If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.10. The company has a target debt-equity ratio of 70. The expected return on the market portfolio is 11 percent and Treasury bills currently yield 3.9 percent. The company has one bond issue outstanding that matures in 18 years, a par value of $2,000, and a coupon rate of 6.6 percent paid semiannually. The bond currently sells for $2,070. The corporate tax rate is 25 percent. a. What is the company's cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company's weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of debt % Cost of equity % % a. b. C. WACC