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If Wild Widgets Inc. were an all-equity company, it would have a beta of 1.85. The company has a target debt-to-equity ratio of 0.3. The
If Wild Widgets Inc. were an all-equity company, it would have a beta of 1.85. The company has a target debt-to-equity ratio of 0.3. The expected return on the market portfolio is 10 percent, and Treasury bills currently yield 6.0 percent. The company has one bond issue outstanding that matures in 20 years and has a 11.0 percent coupon rate. The bond currently sells for $1,280. The corporate tax rate is 34 percent. a. What is the company's cost of debt? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit \% sign in your response.) Cost of debt % b. What is the company's cost of equity? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit % sign in your response.) Cost of equity % c. What is the company's WACC? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit % sign in your response.) WACC %
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