Question
Given the following cash flows: Year 0 1 2 3 CF -3,500 600 1,000 Cash flow will grow at a constant rate g=6% We choose
Given the following cash flows:
| Year | 0 | 1 | 2 | 3 |
| CF | -3,500 | 600 | 1,000 | Cash flow will grow at a constant rate g=6% |
We choose the following capital structure plan:
| Debt | Equity | |
| Plan | 30% | 70% |
Equity Benchmark:
The unlevered beta is 2, market return is 16%, risk-free rate is 3%.
Debt Benchmark:
Par:100, Annual Coupon: 6%, 10-year to maturity, Selling at $88.43
Tax rate is 40%.
What is the Weighted Average Cost of Capital (WACC)?
Given the following cash flows:
| Year | 0 | 1 | 2 | 3 |
| CF | -3,500 | 600 | 1,000 | Cash flow will grow at a constant rate g=6% |
We choose the following capital structure plan:
| Debt | Equity | |
| Plan | 30% | 70% |
Equity Benchmark:
The unlevered beta is 2, market return is 16%, risk-free rate is 3%.
Debt Benchmark:
Par:100, Annual Coupon: 6%, 10-year to maturity, Selling at $88.43
Tax rate is 40%.
What is the Weighted Average Cost of Capital (WACC)?
33.14%
21.69%
26.37%
17.28%
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
