Company A has an outstanding bond issue with 5 years to maturity, a face value of $1,000 and a coupon rate of 5% that pays out semi-annually. The bond sells for $900.
Company stock sells for $4 per share with 1 million shares outstanding. The beta is 1.2.
The S &P currently yields 7% and treasury bills currently yield 2%. The face value of company's long term debt is $3 million. Find the cost of equity?
Find cost of debt? Find WACC?