Question
Suppose a company estimates a 12% WACC based on 75% debt and 25% common equity. If the pre-tax cost of debt is 12.5 %, tax
Suppose a company estimates a 12% WACC based on 75% debt and 25% common equity. If the pre-tax cost of debt is 12.5 %, tax rate is 20%. treasury yield is 6% and market risk premium is 8%, then what is the company's beta?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Cost of debt 125 1 Tax Rate 125 120 10 Let the cost of equity be x W...
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Step: 2
Step: 3
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
6th Canadian edition
1259024962, 978-1259024962
