Question
Your firm is has equity of $2,280,000.00 and debt of $2,590,000.00. The firm has been estimated to have a beta of 1.50 and the expected
Your firm is has equity of $2,280,000.00 and debt of $2,590,000.00. The firm has been estimated to have a beta of 1.50 and the expected market risk premium (MRP) is 8.03% with the risk-free rate at 3.47%. The firm just recently issued bonds which traded at $937.64 on its issue date and they have a 10-year maturity (assume standard corporate bonds). The stated rate on the bonds was 4.20%. What is your firms weighted average cost of capital (WACC) if the tax rate is 15.00%? (enter your value as a percent (i.e. 20.5 for 20.5%) tolerance is 0.1) a. 9.52% b. 46.82% c. 15.52% d. 5.00%
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