Determine what is the companys cost of equity and debt

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If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.15. The company has a target debt-equity ratio of 0.4. The expected return on the market portfolio is 13.5 percent, and Treasury bills currently yield 4.4 percent. The company has one bond issue outstanding that matures in 23 years and has an 7.4 percent coupon rate. The bond currently sells for $970. The corporate tax rate is 28 percent.

What is the company's cost of debt?

What is the company's cost of equity?

Reference no: EM13335308

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