Answer:
Missing question <em>"1. What is the cost of debt for Easy Corp? 2. How many interest payments are left for the bond of Easy Corp? 3. What is the interest payment per period for the bond? 4. What is the discount rate per period to use in pricing the bonds? 5. What is the market value of equity for Easy? 6. What is the cost of equity for Easy?"</em>
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1. Cost of debt is equal to YTM, which is equal to 10%
Cost of debt = YTM = 10%
2. Number of interest payment to be made is equal to 26 * 2 = 52
This is because payment is made semi annually
3. Interest payment per period = 8.9141% / 2 * $1,000
Interest payment per period = 4.45705% * $1,000
Interest payment per period = $44.57
4. As the period is semiannual, discount rate per period is equal to 10% / 2 = 5%
5. Market value of equity = 600,000*60 = $36,000,000
6. Cost of equity = Dividend price + Growth rate
Cost of equity = 6.3/60 + 0.05
Cost of equity = 0.105 + 0.05
Cost of equity = 0.155
Cost of equity = 15.5%
