My problem with the question is how to find YTM for the bond to be incopperated in finding WACC.?

Question

A firm has 5,000,000 shares of common stock outstanding with a market price of $9.00 per share. It has 25,000 bonds outstanding, each selling for $1,100. The bonds mature in 12 years, have a coupon rate of 8.5%, and pay coupons annually. The firm's beta is 1.4, the risk free rate is 5%, and the market risk premium is 9%. The tax rate is 35%. Calculate the WACCAT. .

Answer 1

Why do you want to do such ‘triviality’ such as Weighted Average Cost of Capital (WACC) and Weighted Average Cost of Capital after tax (WACCAT)?

WACCAT = WdKd (1 - T) + WpKp + WeKe

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