Assume ABC Corporation has a B credit rating, rf = 5%, Rm = 8%, wd = 54%, Tc = 35%.

1) If Be = 1.9, the cost of equity capital, re (on an annual basis) is closest to (CAPM):

2) The cost of debt capital, rd (on an annual basis) is closest to (CAPM):

3) The beta of the project, Bu is closest to:

4) The unlevered cost of capital, ru is closest to (CAPM):

5) The levered cost of equity, rwacc is closest to:

GIVEN:
rf =
Rm =
Be =
wd =
Tc =
Rating	AAA	AA	A	BBB	BB	B	CCC
Average Default Rate	0.00%	0.10%	0.20%	0.50%	2.20%	5.50%	12.20%
Recession Default Rate	0.00%	1.00%	3.00%	3.00%	8.00%	16.00%	48.00%
Average Beta	0.05	0.05	0.05	0.1	0.17	0.26	0.31
CAPM, re
CAPM, rd
Bu =
Ru =
rwacc =