Equity Information

50 million shares $80 per share
Beta = 1.15
Market risk premium = 9%
Risk-free rate = 5%
Debt Information $1 billion in outstanding debt (face value)
Current price = 1100
Coupon rate = 9%, semiannual coupons 15 years to maturity
Tax rate = 40%

a. What is the cost of debt?
b. What is the cost of equity (using the CAPM)?
c. What is the AFTER-TAX cost of debt?
d. What are the capital structure weights?
e. Compute the Weighted Average Cost of Capital (the WACC) cost of debt?

Example1 lcnrv: ted company uses the lower of cost or nrv method in valuing its inventory items. the inventory at december 31, 2017, consists of products a, b and c, each having 1,000 units. relevant unit data for these products appear below: item a item b item c cost $ 80 $80 $80 estimated selling price 180 100 90 estimated selling cost 30 30 30 required: using the lower of cost or net realizable value rule, determine the proper value of inventory for balance sheet reporting purposes at december 31, 2017. prepare any necessary journal entry. apply the lower of cost or nrv method: • on an individual inventory basis; • on a group basis; • on a total inventory basis. solution worksheet: inventory (on an individual basis): inventory value item nrv cost lc- item a item b item c total inventory (on a group basis): inventory value item nrv cost lc- group 1 (item a and b) group 2 (item c) total inventory (on an aggregate inventory basis): inventory value item nrv cost lc- total inv