50 million shares
$80 per share
Market risk premium =
Risk-free rate = 5%
$1 billion in outstanding
debt (face value)
Current quote = 110
Coupon rate = 9%,
15 years to maturity
Tax rate = 40%
What is the cost of debt?
N = 30; PV = -1100; PMT = 45; FV = 1000; CPT I/Y = 3.9268
RD= 3.927(2) = 7.854%
question: where are the PV, PMT and FV come from? (how to calculate single bond from entire face amount?)
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