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Big Door Company has 9.4 million shares outstanding, which are currently trading for about $12 per share and have a levered equity beta of 1.4.
Big Door Company has 9.4 million shares outstanding, which are currently trading for about $12 per share and have a levered equity beta of 1.4. Big Door has 20,300 outstanding bonds, with a 8% coupon rate, payable semi-annually and due in 10 years. The bonds are rated BBB. Currently the credit spread for BBB is 165 basis points over equivalent-maturity Government of Canada debt. The current yield on 10-year Canada bonds is 4%, compounded semi-annually. The risk-free interest rate is 2.2%, and the market risk premium is 6.3%. The company has a 35% tax rate. (Do not round intermediate calculations.) a. Calculate Big Door's WACC. (Round your answer to 2 decimal places.) WACC b. Calculate Big Door's unlevered beta, using the following formula: (Round your answer to 2 decimal places.) Bu Bleveret Bdebex (1-Tc)
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