The Treasury department at Mystic Company is going through its quarterly review of its WACC. As...

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The Treasury department at Mystic Company is going through its quarterly review of its WACC. As part of that review, they compile the most recent company and market information to be able to estimate the WACC going forward. Below is that information: U.S. Treasury Bond rate Dow Jones 20 yr. average return Current share price Mystic's Beta Mystic's tax rate Dividends paid per share Mystic's market debt ratio Current bank borrowing rate Estimate Mystic's WACC What does it's WACC represent and how should it be used? Explain what the cost of equity is. 4% 11% $40 1.3 21% $1.50 60% 8% The Treasury department at Mystic Company is going through its quarterly review of its WACC. As part of that review, they compile the most recent company and market information to be able to estimate the WACC going forward. Below is that information: U.S. Treasury Bond rate Dow Jones 20 yr. average return Current share price Mystic's Beta Mystic's tax rate Dividends paid per share Mystic's market debt ratio Current bank borrowing rate Estimate Mystic's WACC What does it's WACC represent and how should it be used? Explain what the cost of equity is. 4% 11% $40 1.3 21% $1.50 60% 8%

Answer rating: 100% (QA)

To estimate Mystic Companys weighted average cost of capital WACC we need to calculate the cost of equity and the cost of debt 1 Cost of Equity The co... View the full answer