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Suppose stock in Watta Corporation has a beta of .80. The market risk premium is 6 percent, and the risk-free rate is 6 percent. Wattas
Suppose stock in Watta Corporation has a beta of .80. The market risk premium is 6 percent, and the risk-free rate is 6 percent. Wattas last dividend was $1.20 per share, and the dividend is expected to grow at 8 percent indefinitely. The stock currently sells for $45 per share. suppose Watta has a target debtequity ratio of 50 percent. Its cost of debt is 9 percent before taxes. If the tax rate is 35 percent, what is the WACC? (use the average cost of equity based on CAPM and the dividend discount model)
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