As an Analyst you were tasked to compute for the Weighted Average Cost of Capital of various companies given the following information. Income tax rate is 25% a. What is the cost of equity of each companies? b. What is the after tax cost of debt of each companies? c. What is the WACC of each companies?   W Corp A Corp Co. Corp Ca Corp Risk Free rate 4.00% 3.00% 2.00% 3.50% Beta 1.25 % 1.50% 1.30% 1.40% Market Return 12.00% 11.00 % 10:00% 8:00% Debt to Equity Ratio 2.5 3 4 3.5 Credit Spread om BPS 200 300 250 150

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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As an Analyst you were tasked to compute for the Weighted Average Cost of Capital of various
companies given the following information. Income tax rate is 25%

a. What is the cost of equity of each companies?
b. What is the after tax cost of debt of each companies?
c. What is the WACC of each companies?

  W Corp A Corp Co. Corp Ca Corp
Risk Free rate 4.00% 3.00% 2.00% 3.50%
Beta 1.25 % 1.50% 1.30% 1.40%
Market Return 12.00% 11.00 % 10:00% 8:00%
Debt to Equity Ratio 2.5 3 4 3.5
Credit Spread om BPS 200 300 250 150
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