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Adidas is looking to compute its WACC. Suppose their tax rate is 2 7 . 0 % , the market risk premium is 6 .

Adidas is looking to compute its WACC. Suppose their tax rate is 27.0%, the market risk premium is 6.4%, and the risk-free interest rate is 5.4%. They have an equity beta of 1.28. The YTM of their debt is 7.5%, while their probability of default is 10%. If they default, investors expect to receive only 60 cents per dollar owed. And Adidas wants to maintain a capital structure where 30% of their capital comes from debt(with the rest from equity.) What is Adidas' WACC?

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