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Estimate the approximate yield to maturity of company debt and the after-tax cost of debt 2.
Im doing my finance paper on Coca Cola and I need help with these questions.1.Estimate the approximate yield to maturity of company debt and the after-tax cost of debt2.Determine the approximate cost (required rate of return) of equity using the Capital Asset Pricing Model. 3.Determine the market values of the company debt, equity and assets.4.Calculate the weighted average cost of capital. 5.Explain the significance of the company's WACC to its management.To simplify the calculations, you may assume that the yield to maturity of company debt is 6% unless you believe that that value is too high or too low. The after tax cost of debt may be calculated based on the tax rate you estimate that the company is paying based on a recent income statement. For the exercise you may assume that the market value of the debt is equal to the book value of the debt (total liabilities). The market value of the equity is equal to the number of shares outstanding times the current market price per share. The market value of the assets is equal to the market value of the debt plus the market value of the equity.
