Question
37.Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 8.4% yield to maturity. The
37.Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 8.4% yield to maturity. The risk-free rate (rRF) is 3.5%, and the market risk premium (rM- rRF) is 6.4%. Using the CAPM, Bloom estimates that its cost of equity is currently 12.8%. The company has a 26% tax rate.
What is Bloom's current WACC?
Carry out calculations with accuracy and report answers to four decimal places.
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Authors: Robert S. Witte, John S. Witte
11th Edition
9781119254515
