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Cost of Capital show the whole procedure a) A company has a beta value of 1.5. What is their cost of equity, based on the
Cost of Capital
show the whole procedure
a) A company has a beta value of 1.5. What is their cost of equity, based on the Capital Asset Pricing Model? Use a risk-free rate of 1.2% and RM = 8.5%.
b) If the same company has equity capital of 9,000,000, a loan of 2,000,000 for which it pays an interest rate of 6% per year, and bonds worth 1,000,000 that pay an annual interest rate of 9%, what is its WACC? Consider an effective income tax rate of 30%.
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