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4 The common stock of Buildwell Conservation & Construction Incorporated (BCCl) has a beta of 0.9 . The Treasury bill rate is 4%, and the
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The common stock of Buildwell Conservation \& Construction Incorporated (BCCl) has a beta of 0.9 . The Treasury bill rate is 4%, and the market risk premium is estimated at 10%. BCCl's capital structure is 25% debt, paying an interest rate of 8%, and 75% equity. The debt sells at par. Buildwell pays tax at 21%. a. What is BCCl 's cost of equity capital? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is its WACC? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. If BCCl is presented with a normal project with an internal rate of return of 10%, should it accept the project if it has the same level of risk as the current firmStep by Step Solution
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