ABC Company has earnings before interest and taxes (EBIT) of $250,000 and a capital structure consisting of
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ABC Company has earnings before interest and taxes (EBIT) of $250,000 and a capital structure consisting of 60% debt and 40% equity. The company has $500,000 in debt outstanding with a yield to maturity of 8%. The company's equity has a beta of 1.2, and the risk-free rate is 4%. The expected market return is 10%. The company's tax rate is 30%. Calculate the company's weighted average cost of capital (WACC) and the enterprise value (EV) assuming a perpetual growth rate of 3%.
Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
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