ITF.Inc currently has 5 millions commons share outstanding that market price is $4 per share and beta is equal to
ITF’s debt has a market value of $30 million, a coupon rate equal to 5% ,and seven years to maturity.
Three-month treasury bills yield 4% and the market risk premium is estimated at 8%.
Seven-year government bonds have a yield to maturity of 4.75%.
The debt has an A+rating, which means its credit spread is 1.24%
ITF’s tax rate is 40%.
a based on above information, what is ITF’s expected rate of return on equity capital?
b what is yield on debt?
cwhat is WACC?(weighted-average cost of capital)