Question
Problem 9-13 Choosing the Right Cost of Capital 9.1 Choosing the Right Discount Rate The risk-free rate equals 7%, and the expected risk premium on
Problem 9-13
Choosing the Right Cost of Capital
9.1 Choosing the Right Discount Rate
The risk-free rate equals 7%, and the expected risk premium on the market portfolio equals 7%. A particular company has bonds outstanding that offer investors a yield to maturity of 7.5%. The company also has common stock outstanding (with market value equal to its bonds outstanding) with an expected return of 20%. What is the firm's WACC? You may assume there are no taxes. Round you answer to two decimal places.
What is the beta of the firm's assets? You may assume there are no taxes. Round you answer to two decimal places.
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Introduction to Corporate Finance What Companies Do
Authors: John Graham, Scott Smart
3rd edition
9781111532611, 1111222282, 1111532613, 978-1111222284
