Value of Equity and WACC Assignment | Homework For You
February 13th, 2020
A firm is financed by a short term bank loan, long term corporate binds and equity. The market value of the bank loan is 140,200 and the interest rate paid on it is 6.25%. The market value of corporate bonds is $305,300 and the interest rate paid on them is 8.25%. The expected rate of return on the companys share is 15.25%. There are 70,000 shares outstanding, and the shares are trading at $5. The corporate tax rate is 30% and there are no other taxes.
1. Calculate the value of equity and the total value of the firm
2. Calculate the companys weighted average cost of capital. Get Finance homework help today