Hilton Corporation has 1 million shares of common stock outstanding and 175,000 bonds with 6% coupon...

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Question

Hilton Corporation has 1 million shares of common stock outstanding and 175,000 bonds with 6% coupon...

Hilton Corporation has 1 million shares of common stock outstanding and 175,000 bonds with 6% coupon at $1000 par each. The stock currently sells at $53 per share and has a beta of

1.15; the bonds have 25 years to maturity and sell at $1141. The market risk premium is 6.8% and Treasury bills are yielding 3.1%. If Hilton’s corporate tax rate is 21%, what is the

company’s cost of capital (WACC)?

business finance

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Answer 1

Answer #1

Before tax cost of debt: 5.01% RATE(25*2,1000*6%/2,-1141,1000)*2 after tax cost of debt: 3.95% before tax cost x 1-tax rate (

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Answer 2

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Hilton Corporation has 1 million shares of common stock outstanding and 175,000 bonds with 6% coupon...

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Hilton Corporation has 1 million shares of common stock outstanding and 175,000 bonds with 6% coupon...

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