Question
Company A has $12 million in debt, with beta equal to 0,2, and $20 million in equity. Company A WACC is 12%. If company A
Company A has $12 million in debt, with beta equal to 0,2, and $20 million in equity. Company A WACC is 12%. If company A decides to issue $3 million in debt to buyback stock, what will be the new WACC? Assume that corporate taxes are 34%, risk free rate is 4% and risk premium is 7%.
Answer ( New WACC = 11.83)
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School Finance A Policy Perspective
Authors: Allan Odden, Lawrence Picus
6th Edition
1259922316, 9781259922312
