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Question No 25 (10 points) Lululemon Athletica's share is currently trading at $50, and its market capitalization is $7 million. The firm's beta is 1.5,
Question No 25 (10 points) Lululemon Athletica's share is currently trading at $50, and its market capitalization is $7 million. The firm's beta is 1.5, the risk-free rate is 2.4%, and the market risk premium is 6%. The firm has 5000 bonds outstanding. The face value of each bond is $1000 and will mature in 10 years. The coupon rate is 8%, and the coupon is paid on an annual basis. The bonds are trading at 110% of the face value. The firm's tax rate is 35%. What is Lululemon's WACC? If Lululemon were an unlevered firm, then what would be its WACC? ***You must show your work to get credit (you can use both sides of the page to show your work)
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