Question
A Inc. needs to make a capital budget decision and the CFO needs to know what its WACC is? A Inc. is a public listed
A Inc. needs to make a capital budget decision and the CFO needs to know what its WACC is? A Inc. is a public listed company and it has a beta of 1.2 against the S&P 500 return last ten years, Today, the risk-free rate is 5.8% (T-Bill), and the return on the market portfolio (S&P 500) is 14.00%. Currently, A Inc.s share is sold at $85 and it has 6 million outstanding shares. Also, A Inc. has issued 400,000 10 years semi-annual coupon bonds last year with 5% coupon rate. Now, its bonds are rated as BBB and it is traded at $900 in the market. The companys marginal tax rate is 27%. What is A Inc.s after-tax WACC?
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