Economics Homework Help
ITF.Inc currently has 5 millions commons share outstanding that market price is $4 per share and beta is equal to
ITF.Inc currently has 5 millions commons share outstanding that market price is $4 per share and beta is equal to
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0.8.
ITF’s debt has a market value of $30 million, a coupon rate equal to 5% ,and seven years to maturity.
Three-month treasury bills yield 4% and the market risk premium is estimated at 8%.
Seven-year government bonds have a yield to maturity of 4.75%.
The debt has an A+rating, which means its credit spread is 1.24%
ITF’s tax rate is 40%.
a> based on above information, what is ITF’s expected rate of return on equity capital?
b> what is yield on debt?
c>what is WACC?(weighted-average cost of capital)
