Question
WACC calculation 2. Assume that you are on the financial staff of Cordell Enterprises, and you have collected the following data: (1) The yield to
WACC calculation
2. Assume that you are on the financial staff of Cordell Enterprises, and you have collected the following data: (1) The yield to maturity on the company's outstanding 7% annual coupon bonds is 5.5%, and its tax rate is 40%. (2) The risk-free rate is 3%, the market risk premium (rM- rRF) is 5%, and the firm's beta is 1.1. (3) The firm's capital structure consists of 55% debt and 45% equity. What is Cordell's WACC?
a. 4.75%
b. 5.00%
c. 5.64%
d. 6.14%
e. 6.89%
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Millon Cornett
9th edition
1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772
