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For the following questions, please make these assumptions: The 10-Year Treasury is yielding 3.00% The Equity Risk Premium is 5.00% Bonds trade at a premium
For the following questions, please make these assumptions:
- The 10-Year Treasury is yielding 3.00%
- The Equity Risk Premium is 5.00%
- Bonds trade at a premium to the risk-free rate of return as follows:
Rating | Premium Over Treasuries |
AAA | 0.4% |
AA | 0.6% |
A | 1.0% |
BBB | 1.2% |
BB | 1.4% |
B | 1.7% |
C | 2.0% |
Pfizer is a maker of pharmaceuticals. It has a market capitalization of $240 billion and outstanding debts of $74 billion. Its beta is 0.96. Its debt is rated A. Its tax rate is 30%.
Given this information, what is the WACC, rounded to the nearest tenth of one percent?
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