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QUESTION
RON Ltd has the following capital structure components: Five million shares issued with a current market price of 11. Equity holders require a 11%...
RON Ltd has the following capital structure components:
- Five million shares issued with a current market price of 11. Equity holders require a 11% return.
- $10 million face value of Corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%.
If the firm faces a corporate tax rate of 30%, compute RON Ltd's Weighted Average Cost of Capital (WACC).
