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You have been hired as a consultant of BYC, a large private manufacturer of industrial products, to calculate their cost of capital. You have gathered

image text in transcribed You have been hired as a consultant of BYC, a large private manufacturer of industrial products, to calculate their cost of capital. You have gathered the following information: 10 -year Treasury yield 4.5 percent Expected return on the market of 10.2 percent BYC's tax rate is 38 percent The company is operating at their target debt to equity ratio of 0.7 Pre-tax cost of debt is 225 bps over the risk free rate You have determined that comparable companies have average debt to equity ratios of 1.13 and an average beta of 1.08 A. Calculate BYC's weight of debt B. Calculate BYC's weight of equity C. Calculate BYC's after tax cost of debt D. Calculate BYC's cost of equity E. Calculate BYC's WACC

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