Business, 17.08.2019 22:10 alyviariggins

Consider the following scenario: suppose a company has 100 million common shares outstanding, and each share sells for $20. we have estimated that the shares have a beta of 1.25, the risk-free rate is 2%, and the expected market return is 6%. the marginal tax rate for this company is 35%. the company also has $1 billion of bonds outstanding and the yield to maturity on these bonds is 4%. the company has a target capital structure of 60% equity and 40% debt. it does not and will not issue preferred stocks in the future. what is the cost of equity for this company?

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Consider the following scenario: suppose a company has 100 million common shares outstanding, and e...

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