Question
Assumption: WD = 60%, RD = 7%, for unleveraged firm: Bu =1; Tax Rate=30%, Rf= 4%, Market Return = 9%. Use the formula B =
Assumption: WD = 60%, RD = 7%, for unleveraged firm: Bu =1; Tax Rate=30%, Rf= 4%, Market Return = 9%. Use the formula B = Bu [1+ (1-T) (Wd /Ws)], What is the WACC of the firm? Show all of your work and explain.
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Financial Reporting and Analysis
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
7th edition
1259722651, 978-1259722653
