A Firm Has 10,000,000shares of Common Stock Outstanding, Each with a Market

question 52

Essay

A firm has 10,000,000shares of common stock outstanding, each with a market price of $15.00 per share.It has 80,000 bonds outstanding, each selling for $1020.The bonds mature in 15 years, have a coupon rate of 9%, and pay coupons semi-annually.The firm's equity has a beta of 1.9, and the expected market return is 10%.The tax rate is 30% and the WACC is 12%.Calculate the risk free rate.

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Definitions:

Further Harm

Additional injury or damage that occurs or may occur as a consequence of an initial act or occurrence.

Restatement Third

A collection of model legal doctrines, developed by the American Law Institute, that aims to clarify, modernize, and otherwise improve various aspects of the law.

Economic Harm

Financial damage or loss suffered by an individual or organization, often resulting from unfair competition, breach of contract, or other wrongful acts.

Monetary Damages

Monetary damages are a sum of money awarded as compensation to a plaintiff for losses or injuries suffered due to the defendant's actions.