Question
The market value of Fortescues ordinary shares and debt are $8 billion and $12 billion, respectively. Fortescue has a beta of 1.3, the market risk
The market value of Fortescues ordinary shares and debt are $8 billion and $12 billion, respectively. Fortescue has a beta of 1.3, the market risk premium is 7% and the risk-free rate of interest is 4%. Fortescues debt trades with a yield to maturity of 8.5%. What is Fortescues weighted average cost of capital if its tax rate is 30%? A) 8.34% B) 9.56% C) 8.81% D) 9.46%
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The Oxford Handbook Of Quantitative Asset Management
Authors: Bernd Scherer, Kenneth Winston
1st Edition
0199553432, 978-0199553433
