Question
Pls, answer without Excel. Suppose that Caterpillar (CAT) has a project with the following cash flows: YEAR 0 1 2 3 4 Cash flow -$40.00
Pls, answer without Excel.
Suppose that Caterpillar (CAT) has a project with the following cash flows:
| YEAR | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| Cash flow | -$40.00 | $12.00 | $10.00 | $12.00 | $12.00 |
The company has debt valued at 40.00 billion on its balance sheet, while the market value of its common stock is roughly 28.00 billion. The yield to maturity on the debt is 5.50%, and the cost of equity for the firm is 12.00%. Finally, the marginal tax rate facing the company is 35.00%.
What is the weighted average cost of capital for Caterpillar?
Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
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Financial Management For Decision Making
Authors: Harold Jr. Bierman, Seymour Smidt
1st Edition
1587982129, 9781587982125
