Question
You have obtained the following information for ABC. a) The frim's bonds mature in 20 years,have an 8% annual coupon, a par value of $1000,
You have obtained the following information for ABC. a) The frim's bonds mature in 20 years,have an 8% annual coupon, a par value of $1000, and a amarket price of $1,050. b) The company's tax rate is 40%. c) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stocks beta is 1.20. d) the capital structure consists of 35% debt and 65% equity. The firm uses the CAPM to estimate the cost of common stock. What is WACC?
(The answer is 8.79%) Can you explain how to get it
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Understanding Financial Accounting
Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald
1st Canadian Edition
978-1118849385
