Question
What is SteelTech's cost of capital? Cost of Equity = Risk-Free Rate + *(Equity Risk Premium) After-Tax Cost of Debt = (1-Tax Rate) * Pre-Tax
What is SteelTech's cost of capital?
Cost of Equity = Risk-Free Rate + *(Equity Risk Premium)
After-Tax Cost of Debt = (1-Tax Rate) * Pre-Tax Cost of Debt
Risk-Free Rate (10-Year U.S. Treasury) = 3%
The Equity Risk Premium = 4.5%
Tax Rate: 40%
Automaton's beta () = 1.2
Automaton's Market Value of Equity / Total Capital ratio = 100%
Automaton's Market Value of Debt / Total Capital = 0%
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
6th edition
1305968352, 978-1337635653, 978-1305968356
