Question
Rollins Corporation is estimating its WACC. Its target capital structure is 40 percent debt and 60 percent common equity. Its bonds have a 12 percent
Rollins Corporation is estimating its WACC. Its target capital structure is 40 percent debt and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. Rollins' beta is 1.2, the risk-free rate is 5 percent, and the market risk premium is 8 percent. The firm's marginal tax rate is 25 percent.
What is Rollins' WACC?
Group of answer choices
12.36%
10.07%
13.75%
14.98%
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Accounting Principles Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
8th Canadian Edition
978-1119502425
