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Calculate the WACC . Use CAPM for the cost of Equity, and a weighted average cost of debt. Cost of Equity CAPM Information: CAPM 10
| Calculate the WACC. Use CAPM for the cost of Equity, and a weighted average cost of debt. | ||||||
| Cost of Equity | ||||||
| CAPM Information: | CAPM | |||||
| 10 million shares | ||||||
| Stock price $60 per share | Market Capitalization | |||||
| Beta = 1.40 | ||||||
| Required stock market return = 9% (Rm) | Cost of Debt | YTM | Value of Bond | |||
| 10-year Treasury YTM = 4% (Rrf) | ||||||
| Issue 1 | ||||||
| Debt Information: | ||||||
| Only 1 bond outstanding | ||||||
| Issue 1: | ||||||
| Total market value $400 million | Total Capital | |||||
| Current price = $1,071.06 | ||||||
| Coupon rate = 7%, semiannual coupons | ||||||
| 10 years to maturity | WACC | |||||
| Tax rate = 40% | ||||||
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Introduction To Personal Finance
Authors: John E Grable, Lance Palmer
1st Edition
1119626633, 9781119626633
