Question - Sprint Nextel has $22.1 billion in total debt which approximates market value. Interest expense for the year was approximately $1.5 billion. The Company's market capitalization is approximately $17.2 billion, its market beta is 2.12 and its marginal tax rate is 35%. Assume that the risk-free rate equals 4.6% and the market premium equals 5%
Estimate Sprint Nextel's Cost of debt capital?
What does a beta of 2.12 mean regarding the valatility of Sprint Nextel's stock price?
Estimate Sprint Nextel's Cost of equity capital?
Estimate Sprint Nextel's Weighted average cost of capital?