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Help with homework question The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of 9. The Treasury bill rate is 4%,
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The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of 9. The Treasury bill rate is 4%, and the market risk premium is estimated at 10%. BCCI's capital structure is 25% debt, paying an interest rate of 8%, and 75% equity. The debt sells at par. Buildwell pays tax at 40%. a. What is BCCl's cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Cost of equity capital % b. What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) WACC % c. If BCCI is presented with a project with an internal rate of return of 10%, should it accept the project if it has the same level of risk as the current firm? No YesStep by Step Solution
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