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Points: 0 of 1 Tim works for HydroTech, a manufacturer of high - pressure industrial water pumps. He reports directly to the CFO, and she

Points: 0 of 1
Tim works for HydroTech, a manufacturer of high-pressure industrial water pumps. He reports directly to the CFO, and she has asked him to calculate HydroTech's WACC. He has gathered the following information about HydroTech: its market capitalization (its market value of equity) is $130 million, its beta is 1.2, the total book value of its debt is $40 million, it has $20 million cash, and its cost of debt (using the quoted yields on HydroTech's outstanding bond issues) is 5%. In addition, the yield of the 10-year government bond (the risk-free rate) is 3%, the market risk premium is 5%, and the marginal corporate tax rate is 35%. Calculate HydroTech's WACC. When is it appropriate to use this WACC to evaluate a new project?
Calculate HydroTech's WACC.
WACC =%
(Round to two decimal places.)
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