ABC Company WACC

E(r_M) 10%

Cost of debt, r_D 8%

Corporate tax rate, T_C 30%

Cov(r_Abby,r_M) 0.13

Debt, D 1,500,000

Var(r_M) 0.11

Risk-free rate, r_f 3%

Equity, E 3,000,000

a) Finding the company cost of equity.

Equity beta, ?

Cost of equity, r_E ?

b)Finding the company WACC.

V=D+E ?

WACC ?

c) After the IPO, the company's equity is the number of shares multiplied in the share's market value.

Therefore:

Equity (new), E ?

Finding the company WACC.

V=D+E ?

WACC ?