Question
Here is some information about Britain Inc.: Beta of its common stock = 2.0 Treasury bill rate = 4% Market risk premium = 7% Yield
Here is some information about Britain Inc.:
Beta of its common stock = 2.0
Treasury bill rate = 4%
Market risk premium = 7%
Yield to maturity on its bond = 6%
Book value of its common stock = $300 million
Market value of its common stock = $900 million
Book Value of its bond = $500 million
Market value of its bond = $800 million
Corporate tax rate = 34%
- What is the company's WACC?
- If the company considers a normal project whose risk is about thesame as the company's risk with an internal rate of return of12%, should it accept the project?Why or why not?
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Entrepreneurial Finance
Authors: Philip J. Adelman; Alan M. Marks
6th edition
9780133099096, 133140512, 133099091, 978-0133140514
