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You work for a firm that is looking to raise capital in the near future. As part of your work to prepare for potential investors,
You work for a firm that is looking to raise capital in the near future. As part of your work to prepare for potential investors, you determined that you need to compute the WACC of your firm. Your firm is currently structured in such a way that the DebttoEquity ratio is Assume a tax rate of
Since your company size is comparable with publicly traded microcap companies, you started analyzing the Wilshire MicroCap ETF, which represents a basket of microcap companies in the US
Your firm considers the month Government TBills as the riskfree investment.
Based on the price data in the file attached, answer the following questions.
Cost of Equity:
What was the annualized return for the reference microcap ETF?
During the period considered, what was the risk premium of microcap stocks?
Historically your company has produced equity returns that indicate a beta to the general microcap market of around
Assuming the beta will remain stable, what should your cost of equity be
Cost of Debt:
Your only debt outstanding in the market is a single bond with the following parameters:
yrs until maturity
semiannual coupons with an annual coupon rate of
a current market price of as a percentage of the notional amount
What is your cost of debt?
Given the results from and what is your firm's WACC?
How would I solve this without uploading file attached?
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