Question
DPL plans to fund a project with 25% debt. The debt has a before-tax cost of 8%. The rest of the funds are from retained
DPL plans to fund a project with 25% debt. The debt has a before-tax cost of 8%. The rest of the funds are from retained earnings. The firm has a beta of 1.20. The T-bill rate is 5% and the return on the S&P 500 (market) is 15%. What is the weighted average cost of capital (WACC) for the firm? Assume the tax rate is 30%.
14.2%
18.7%
14.8%
19.3%
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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Peggy L. Hedges, Philip Chang, Keith C. Brown, Hedges Reilly Brown
1st Canadian Edition
0176500693, 978-0176500696
