Question
A firm currently has 18M in debt and 106M in equity. Its cost of debt is 3.7%, tax rate of 30%, and the Beta of
A firm currently has 18M in debt and 106M in equity. Its cost of debt is 3.7%, tax rate of 30%, and the Beta of 1.6. Current market conditions indicate that the risk-free rate is 2.3% and the expected return on the market is 10.0%.
If the firm were to increase its weight of debt by 13%, what would be the change in its WACC?
Assume that the cost of debt and equity do not change.
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The Financial Crisis Implications For Research And Teaching
Authors: Ted Azarmi, Wolfgang Amann
1st Edition
3319205870, 978-3319205878
