Westlake Corp. has a capital structure that has 60 percent debt at a cost of 12 percent
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Westlake Corp. has a capital structure that has 60 percent debt at a cost of 12 percent and 40 percent equity. Westlake’s stock has a beta of 1.2, market risk premium of 8 percent, and a risk-free rate of 5 percent. The firm has a potential project on hand, which requires an initial investment of $120,000 and generates an annual year-end cash flow of $37,500 for five years.
Calculate the IRR of this project. Decide if the project should be accepted or not, assuming the project is less risky for the firm. Tc = 40%.
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
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Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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