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Calculate the cost of capital using the CAPM model for Jim's Manufacturing Company. Calculate the following for Jim's Manufacturing Company given the assumptions listed below
Calculate the cost of capital using the CAPM model for Jim's Manufacturing Company. Calculate the following for Jim's Manufacturing Company given the assumptions listed below 1. Weight of debt 2. Weight of equity 3. After tax cost of debt 4. Equity 5. WACC Assumptions = Pre-tax cost of debt is 225bps over the risk-free rate Expected return on the market of 10.2 percent BYC's tax rate is 38 percent The company is operating at their target debt to equity ratio of 0.7 Comparable companies have average debt to equity ratios of 1.13 and an average beta of 1.08
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