Shares of stocks during bear market or bull market

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Reference no: EM131912692

1. A company has $10 million of debt outstanding with a coupon rate of 8%. Currently the yield to maturity on these bonds is 10.5%. If the firm's tax rate is 40%, what is relevant cost of debt financing to this company?

2. What is the WACC for a firm financed with 30% debt if the debt investors require a return of 12.5% and equity investors require a 16% return? The corporate tax rate is 20%.

3. Is it better to purchase shares of stocks during a bear market or a bull market? Take a position and justify your answer as you explain each market.

Reference no: EM131912692

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