ZE is a large company operating in the jet engine business. ZEcurrently has 250 million shares outstanding and its stock price is$20 per share. ZE has debt of $3 billion. ZEA1s current equity betais 1.3. The current risk free rate is 5%. The market risk premiumis expected to be 4.5%. ZEA 1s debt is currently rated A1A AA1.
The corporate tax rate is 35%.

Return spreads
AAA	AA	A	BBB	BB	B	CCC
0.48%	0.58%	0.75%	1.27%	2.60%	3.10%	3.40%

What is the WACC of ZE Corporation at its current capital structure?

 

Answer rating: 100% (QA)

The WACC of ZE Corporation at its current capital structure i... View the full answer