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The company maintains a debt to equity ratio equal to 1.5. The marginal tax rate is 40%. The companys current bonds have a yield to
The company maintains a debt to equity ratio equal to 1.5. The marginal tax rate is 40%. The companys current bonds have a yield to maturity of about 5.00%. The current 10-year Treasury notes have a yield to maturity of 2% and the forecast for the S&P 500 market premium is 7.00%. The companys overall beta is 1.30.
Please determine the WACC (weighted average cost of capital) for the company with following assumptions: The company maintains a debt to equity ratio equal to 1.5. The marginal tax rate is 40%. The companys current bonds have a yield to maturity of about 5.00%. The current 10-year Treasury notes have a yield to maturity of 2% and the forecast for the S&P 500 market premium is 7.00%. The companys overall beta is 1.30.
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