You are trying to determine the WACC for a company. It has the followingcharacteristics.a. The company had pre-tax net income of $55mm last year and paid taxes of$11mm.b. The company has $1,500mm of total liabilities, $100mm of accounts payable,and $600mm of long-term debt.c. The company has 220mm shares authorized, 45mm shares issued, and 10mmshares of treasury stock. The stock now trades at $19.45 per share.d. the 10 year Treasury rate is 3%e. The pre-tax cost of debt is 7%f. The company's Beta is 2.44 and the market return for equities is 9%.What is the WACC? Use the correct symbol and round to the nearest O decimalplaces.

Total debt = $600 mm Shares issued = 45 mm Treasury stock = 10 mm Current price = $19.45 Pre tax…

Answered: You are trying to determine the WACC…

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

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