Question
You will use the following information for the rest of the assignment (for anything that is not updated in later questions). You are trying to
You will use the following information for the rest of the assignment (for anything that is not updated in later questions). You are trying to determine what would happen to your firm's WACC if you take on a new project. Your capital structure consists of 24% debt with a cost of 6% and a beta of 0.6. The market return is 11.5% and the risk-free rate is 2.5%. Your firm has invested in three projects, with 40% in project 1 (beta of 0.93), 15% in project 2 (beta of 1.40), and 45% in project 3 (beta of 1.88). The tax rate is 150%. First, what is your current WACC? Input your answer in decimal (not percentage) scale, rounded to three decimal places (13.11% should be entered as 0.131).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started