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
Related questions
Question
6
Transcribed Image Text:MacG, Inc. has an equity market capitalization of $7,400,000. Its equity beta is 4.2. The risk-free
rate and market return are expected to be 1.4% and 7.2 %, respectively. MacG also has 2,700,000
in bonds that have a yield-to-maturity of 5.4%. If MacG faces a tax rate of 14%, which is the
weighted average cost of capital for MacG?
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