Targeted weighted average cost of capital

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1. BlockOut Co. has 76,061 bonds outstanding that are selling at par value. The bonds yield 8.5 percent. The company also has 4.1 million shares of common stock outstanding. The stock has a beta of 1.35 and sells for $46.2 a share. The U.S. Treasury bill is yielding 4.6 percent and the market risk premium is 7.2 percent. Blackout's tax rate is 34 percent. What is the firm's weighted average cost of capital? (Enter answer in percents.)

2. Dominosa, Inc. wants to have a weighted average cost of capital of 8.2 percent. The firm has an aftertax cost of debt of 5.2 percent and a cost of equity of 11.6 percent. What debt ratio is needed for the firm to achieve their targeted weighted average cost of capital? Enter the answer in percents.

Reference no: EM132044774

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