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As an Analyst, you were tasked to compute the Weighted Average Cost of Capital of various companies given the following information. Income tax rate is
As an Analyst, you were tasked to compute the Weighted Average Cost of Capital of various companies given the following information. Income tax rate is 25%. W Corp. A Corp. Co Corp. Ca Corp 4.00% 3.00% 2.00% 3.50% Risk Free Rate Beta 1.25 1.50 1.30 1.40 Market Return 12.00% 11.00% 10.00% 8.00% 2.5 3 4 3.5 Debt to Equity Ratio Credit Spread (in BPS) 200 300 250 150 Solve: a. What is the cost of equity of each company? b. What is the after tax cost of debt of each company? c. What is the WACC of each company
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