Question

Calculate the WACC for TTT. Assume TTT is in the 35% tax bracket. TTT has $500 million face value of debt outstanding. The debt has a price of 101:08, a coupon of 6 ½ % (coupons are paid semi-annually), and a maturity of 10 years. TTT has 20 million shares of stock outstanding. The shares are currently priced at $7.67. The company pays no dividend, but estimates of the company’s beta are 2.1. The current risk-free rate is 3.2%, and the rate of return on the market portfolio is 11.4%.

Answer 1

Step-by-step explanation:

Calculate the WACC for TTT. Assume TTT is in the 35% tax bracket. TTT has $500 million face value of debt outstanding. The debt has a price of 101:08, a coupon of 6 ½ % (coupons are paid semi-annually), and a maturity of 10 years. TTT has 20 million shares of stock outstanding. The shares are currently priced at $7.67. The company pays no dividend, but estimates of the company’s beta are 2.1. The current risk-free rate is 3.2%, and the rate of return on the market portfolio is 11.4%.

Answer 2

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.