Calculation of individual costs and WACC Camival Corporation (CCL) recently sold new bonds at discount price of $950.87. The bonds have a short 6-year maturity, have a coupon rate of 9.50%, and pay interest semi-annually. In addition to the $10.053 billion worth of bonds outstanding, Carnival also has $11.545 billion worth of common stock equity outstanding. According to Yahoo! Finance, Carmival's stock has a beta of 1.71. Currently, the expected return on the market portfolio and risk-free rate are, 6.10% and 0.56%, respectively a. Calculate the market value weights for Camival's capital structure b. Calculate Camival's cost of equity using the CAPM. c. Calculate Camival's before-tax cost of debt. d. Calculate Camival's current WACC using a 21% corporate tax rate

Calculation of individual costs and WACC Camival Corporation (CCL) recently sold new bonds at discount price of $950.87. The bonds have a short 6-year maturity, have a coupon rate of 9.50%, and pay interest semi-annually. In addition to the $10.053 billion worth of bonds outstanding, Carnival also has $11.545 billion worth of common stock equity outstanding. According to Yahoo! Finance, Carmival's stock has a beta of 1.71. Currently, the expected return on the market portfolio and risk-free rate are, 6.10% and 0.56%, respectively a. Calculate the market value weights for Camival's capital structure b. Calculate Camival's cost of equity using the CAPM. c. Calculate Camival's before-tax cost of debt. d. Calculate Camival's current WACC using a 21% corporate tax rate

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 17P: The following table gives the current balance sheet for Travellers Inn Inc. (TII), a company that...

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