A company wants to set up a plant to produce electronics. They have 11 million shares outstanding, trading at $68 per sh
Posted: Sun Jul 03, 2022 6:42 am
A company wants to set up a plant to produce electronics. They have 11 million shares outstanding, trading at $68 per share. It has a bond issue outstanding with a face value of $70 mil and 7% coupon rate. The bond sells for 93% of par and has 21 years left to maturity. It makes semmiannual coupon payments. The 10yr treasury bond rate is 2.5% and expected market risk premium is 7%. The companys beta is 1.25 and tax rate is 25%. What is it's cost of capital?