4. Please consider the following company items: Other items 25% 0.60 0.30 BBB Tax rate Unlevered beta Market risk premium Risk free rate Small firm premium Credit spread debt 6.0% 3.0% 2.0% 1.5% Long term growth Long term ROCB 2.0% 9.0% Target debt/equity ratio Bond rating What is the Weighted Average Cost of Capital (or WACC) of this company in percentages (%)? Please round your answer to one decimal place, use a period to indicate the decimal place and provide your answer without a percentage sign (e.g. 13.6 instead of 13.6%).

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

12.

 

4. Please consider the following company items:
Other items
Market risk premium
Long term growth
Long term ROCB
Tax rate
25%
6.0%
2.0%
0.60
0.30
Unlevered beta
Risk free rate
3.0%
9.0%
Target debt/equity ratio
Bond rating
Small firm premium
Credit spread debt
2.0%
1.5%
BBB
What is the Weighted Average Cost of Capital (or WACC) of this company in percentages (%)? Please round your answer to one decimal place, use a period to indicate the
decimal place and provide your answer without a percentage sign (e.g. 13.6 instead of 13.6%).
Transcribed Image Text:4. Please consider the following company items: Other items Market risk premium Long term growth Long term ROCB Tax rate 25% 6.0% 2.0% 0.60 0.30 Unlevered beta Risk free rate 3.0% 9.0% Target debt/equity ratio Bond rating Small firm premium Credit spread debt 2.0% 1.5% BBB What is the Weighted Average Cost of Capital (or WACC) of this company in percentages (%)? Please round your answer to one decimal place, use a period to indicate the decimal place and provide your answer without a percentage sign (e.g. 13.6 instead of 13.6%).
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Analytical Techniques
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education