Question
The Extremo project has an initial investment cost of $ 1,000 and expected positive net cash flows of $ 220 per year from year 1
The Extremo project has an initial investment cost of $ 1,000 and expected positive net cash flows of $ 220 per year from year 1 to year 10 (useful life), the tax rate is 30%. Consider all analysis in current mexican pesos. Some additional information: In the market there is a 30-year CETES irrigation-free interest rate: 6% The cost of Extremo debt is 9% before taxes. The average market return measured through the long-term CPI is 14%. The capital structure for financing Extremo is 60% debt, 40% capital, the beta of the company is 1.2 What is the company's Weighted Average Cost of Capital (WACC)? (in percentage)
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