Question
WACC. The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of .9. The Treasury bill rate is 4%, and the market
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WACC. The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of .9. The Treasury bill rate is 4%, and the market risk premium is estimated at 8%. BCCIs capital structure is 30% debt, paying a 5% interest rate, and 70% equity. Buildwell pays tax at 40%. (LO13-1)
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What is BCCIs cost of equity capital?
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What is its WACC?
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If BCCI is presented with a normal project with an internal rate of return of 12%, should it
accept the project?
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Finance for Non Financial Managers
Authors: Pierre Bergeron
7th edition
176530835, 978-0176530839
