Question
A company is 40% financed by risk-free debt. The interest rate is 10%, the expected market risk premium is 8%, and the beta of the
| A company is 40% financed by risk-free debt. The interest rate is 10%, the expected market risk premium is 8%, and the beta of the companys common stock is .5. |
| a. | What is the company cost of capital? (Do not round intermediate calculations. Round your answer to 1 decimal place.) |
| Cost of capital | % |
| b. | What is the after-tax WACC, assuming that the company pays tax at a 35% rate? (Do not round intermediate calculations.) |
| After-tax WACC | % |
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International Business The Challenges Of Globalization
Authors: John J. Wild, Kenneth L. Wild
9th Edition
0134729226, 978-0134729220
