FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company has a beta of 0.8, pre-tax cost of debt of 6.8% and an effective corporate tax rate of 21%.57% of its capital structure

image text in transcribed

A company has a beta of 0.8, pre-tax cost of debt of 6.8% and an effective corporate tax rate of 21%.57% of its capital structure is debt and the rest is equity. The current risk-free rate is 0.4% and the expected market risk premium is 6.3%. What is this company's weighted average cost of capital? Answer in percent, rounded to two decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance Finance For Small Business

Entrepreneurial Finance Finance For Small Business

Authors: Philip J. Adelman

1st Edition

0138129835, 9780138129835

More Books

Students also viewed these Finance questions

Question

★★★★★
What is the most common event that causes the capital stock account to increase? decrease?

Answered: 1 week ago

Question

★★★★★
Identify the four conditions necessary for a risk to be insurable.

Answered: 1 week ago

Question

★★★★★
2. Imagine that your team has decided to franchise the business idea. Develop a set of processes/procedures that would allow a third party to become a franchise of your operation.

Answered: 1 week ago

Question

★★★★★
A severe winter ice storm has swept across North Carolina and Virginia, followed by over a foot of snow and frigid, single-digit temperatures. These weather conditions have resulted in numerous...

Answered: 1 week ago

Question

★★★★★
A company has a beta of 0.8, pre-tax cost of debt of 6.8% and an effective corporate tax rate of 21%.57% of its capital structure is debt and the rest is equity. The current risk-free rate is 0.4%...

Answered: 1 week ago

Question

★★★★★
Which of the following is not a reason for the preparation of a trial balance: Group of answer choices To check that the total amount of debits equals the total amount of credits To simplify the...

Answered: 1 week ago

Question

★★★★★
Two people speak to a poorly performing football team. The first is the coach. He yells and uses profanity. The second is the owner. She calmly lays out consequences if the losing continues....

Answered: 1 week ago

Question

★★★★★
Consider the following data for April 2021 from Maddison Manufacturing Company, which makes silk pennants and uses the average process costing system. All direct materials are added at the beginning...

Answered: 1 week ago

Question

★★★★★
National Bank charges 6% effective annual rate on it's business loans. Assuming monthly compounding, calculate the annual percentage rate on this. enter as decimals and round to 4 decimals. National...

Answered: 1 week ago

Question

★★★★★
28. [0.5/4 Points] DETAILS PREVIOUS ANSWERS SCALCET8 6.3.002. Let S be the solid obtained by rotating the region shown in the figure about the y-axis. (Assume a = 4 and b = 2.) y = a sin(bx) 0 Sketch...

Answered: 1 week ago

Question

★★★★★
Ethical Dilemma . . . Susie's Sweater Factory employs two managers for the factory. These managers work 12 hours per day at $16 per hour. After eight hours, they receive overtime pay. Management is...

Answered: 1 week ago

Previous Question Next Question