New Century Energy Shares plans to raise $50 billion in new capital by issuing $20 billion in
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New Century Energy Shares plans to raise $50 billion in new capital by issuing $20 billion in debt and the rest in equity. The expected yield to maturity on its new debt is 5%, and the firm’s tax rate is 40%. The expected return of the market is 10%, and the risk-free rate of return is 2%. Stocks with similar risk factors have a beta coefficient of 1.50. Based on this information, calculate the firm’s weighted average cost of capital.
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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