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    mcacharel Posts: 1, Reputation: 1
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    Apr 28, 2014, 03:47 PM
    Money and currency
    A company has 29,000,000 EUR in outstanding debt in bonds. The company's bonds are all 4-year bonds with coupon rate of 14% and they are trading at pat. The company has 1,300,000 shares outstanding. The book value per share is 12 EUR while the market price is 29 EUR per share. The company has a beta of 1.7 and faces a ta rate of 22%. The market quotations show that the company's shares price rose 23% last year and analysts expect 13% growth in the next years. The main stock index on this capital market performs 15% yearly and T-Bond rate is 7.5%. Calculate the cost of common stock equity using the capital asset pricing model (CAPM) and the weighted average costof capital (WACC) for this company. HINT: What is YTM of bond since its market price is equal par value

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