Question
Your firm is has equity of $2,200,000.00 and debt of $3,910,000.00. The firm has been estimate to have a beta of 0.50 and the expected
Your firm is has equity of $2,200,000.00 and debt of $3,910,000.00. The firm has been estimate to have a beta of 0.50 and the expected market risk premium (MRP) is 7.48% with the risk-free rate at 2.62%. The firm just recently issued bonds which traded at $1,025.13 on it's issue date and they have a 10-year maturity (assume standard corporate bonds). The stated rate on the bonds was 3.80%. What is your firm's weighted average cost of capital (WACC) if the tax rate is 26.00%? (enter your value as a percent (i.e. 20.5 for 20.5%) tolerance is 0.1)
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