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Can someone answer this question? Question 1 (WACC). Company X's shares are currently trading at $30.50 each. The market yield on its debt is 7%
Can someone answer this question?
Question 1 (WACC). Company X's shares are currently trading at $30.50 each. The market yield on its debt is 7% and the firm's beta is 0.85 . The T-Bill rate is 4% and the expected retum on the market is 8%. The company's target capital structure is 30% debt and 70% equity. The corporate tax rate is 30%. a) Calculate the risk premium as Market Return - Risk-free Rate b) Calculate the equity cost of capital using the CAPM model: Return = Risk - free Rate + beta Equity Market Risk Premium c) Calculate the weighted average cost of capital (WACC). Put your answers in the following format: x%Step by Step Solution
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