Problem #31 Delta Lighting has 3,000,000 shares of common stock outstanding at a market price of $17.50 a share. | Cheap Nursing Papers

Problem #31 Delta Lighting has 3,000,000 shares of common stock outstanding at a market price of $17.50 a share.

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Problem #31

Delta Lighting has 3,000,000 shares of common stock outstanding at a market price of $17.50 a share. The firm also has a bond issue outstanding with a total face value of $28,000,000 which is selling for 86 percent of par. The yield on the bonds is 10%. The risk free rate is 5% and the market risk premium is 8%. The firm has a beta of 1.48 and a tax rate of 30 percent. What is the weighted average cost of capital?

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