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STAR Corp. has 8 million shares of common stock outstanding and 400,000 bonds outstanding, par value 1,000 baht each with 4% coupon rate. The common
STAR Corp. has 8 million shares of common stock outstanding and 400,000 bonds outstanding, par value 1,000 baht each with 4% coupon rate. The common stock currently sells for 50 baht per share and has a beta of 1.20, and the bonds sell at par. The market risk premium is 5 percent, T-bills are yielding 3 percent, and STARs tax rate is 20 percent. If STAR is evaluating a new investment project that has the same risk as the firms typical project, what rate should the firm use to discount the projects cash flows? Hint: find WACC
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