Question
A company has the following capital structure: D/E ratio = 0.21, Equity Beta = 0.97, Cost of Debt = 4.9%. The CEO proposes a new
A company has the following capital structure: D/E ratio = 0.21, Equity Beta = 0.97, Cost of Debt = 4.9%.
The CEO proposes a new leverage, expressed by a target D/E ratio of 0.61. What would be the firm's new WACC?
Assume that the marginal tax rate is 40%, risk-free rate is 3.5%, market risk premium is 4.6%, and that debt is risk less.
Enter your answer as a percentage, with 2 decimals, without the percentage "%" sign. For example, if you obtain an answer equal to 0.123456, that's 12.3456%, so enter 12.35.
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Contemporary Economics An Applications Approach
Authors: Robert Carbaugh
8th Edition
1138652199, 978-1138652194
