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Posted: Mon Apr 25, 2022 8:48 am
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Calculation of individual costs and WACC Carnival Corporation (CCL) recently sold new bonds at discount price of $932.82. The bonds have a short 5-year maturity, have a coupon rate of 8.00%, and pay interest semi-annually. In addition to the 59.242 billion worth of bonds outstanding, Carnival also has $11.396 billion worth of common stock equity outstanding. According to Yahoo! Finance, Carnival's stock has a beta of 1.96. Currently, the expected return on the market portfolio and risk-free rate are, 5.30% and 0.72%, respectively. a. Calculate the market value weights for Carnival's capital structure. b. Calculate Carnival's cost of equity using the CAPM. c. Calculate Carnival's before-tax cost of debt. d. Calculate Carnival's current WACC using a 21% corporate tax rate.
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