Question
CVS Health's market value of common stock is $90 billion and their market value of debt is $70 billion for a total firm value of
CVS Health's market value of common stock is $90 billion and their market value of debt is $70 billion for a total firm value of $160 billion (CVS has no preferred stock). CVS's before-tax cost of debt is 3.5% and their marginal tax rate is 25%. CVS's cost of retained earnings is 9%.
What is CVS Health's weighted average cost of capital (WACC)?
| A. | 6.2% | |
| B. | 6.6% | |
| C. | 5.8% | |
| D. | 7.0% |
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Money, Banking, Financial Markets & Institutions
Authors: Michael Brandl
2nd Edition
1337904821, 9781337904827
