Question
You have the following data for your company. Market Value of Equity: $520 Book Value of Debt: $130 Required rate of return on equity: 12%
You have the following data for your company.
Market Value of Equity: $520
Book Value of Debt: $130
Required rate of return on equity: 12%
Required rate of return on debt (pre-tax): 7%
Corporate tax rate: 25%
The company's debt is assumed to be is reasonably safe, so the book value of debt is a reasonably approximation for the market value of debt.
What is the weighted average cost of capital for this company?
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Measuring And Managing Credit Risk Quantitative Approach For Default Risk Data Analysis And Models For Loss Distributions Unique Strategies For Back Capital Allocation And Saucerization
Authors: Arnaud De Servigny , Olivier Renault
1st Edition
0071417559,007178800X
