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You were recently hired as a consultant to estimate the companys WACC. You have obtained the following information. (1) bonds mature in 25 years, have
You were recently hired as a consultant to estimate the companys WACC. You have obtained the following information. (1) bonds mature in 25 years, have a 7.5% annual coupon, a par value of $1,000, and a market price of $936.49. (2) The companys tax rate is 40%. (3) The risk-free rate is 6.0%, the market risk premium is 5.0%, and the stocks beta is 1.5. (4) The target capital structure consists of 70% debt and 30% equity. What is its WACC?
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