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CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavoured liqueur. Suppose the firm faces a tax rate of 40% and collects the following information.
CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavoured liqueur. Suppose the firm faces a tax rate of 40% and collects the following information. If it plans to finance 15% of the new liqueur-focused division with debt and the rest with equity, what WACC should it use for its liqueur division? Assume a cost of debt of 4.9%, a risk-free rate of 3.9% and a risk premium of 5.1%. Beta Coffee Stop BF Liqueurs 0.62 0.24 % Equity 96% 85% % Debt 4% 15% The weighted average cost of capital is %. (Round to two decimal places.)
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