Question
The common stock of Buildwell Conservation & Construction Incorporated (BCCI) has a beta of 0.9. The Treasury bill rate is 4%, and the market risk
The common stock of Buildwell Conservation & Construction Incorporated (BCCI) has a beta of 0.9. The Treasury bill rate is 4%, and the market risk premium is estimated at 6%. BCCIs capital structure is 24% debt, paying an interest rate of 9%, and 76% equity. The debt sells at par. Buildwell pays tax at 21%.
What is BCCIs cost of equity capital?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
What is its WACC?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
If BCCI is presented with a normal project with an internal rate of return of 12%, should it accept the project if it has the same level of risk as the current firm?
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