Question: 2. a. Suppose you are tasked with coming up with a firm's weighted average cost of capital to be used to evaluate a project that

2. a. Suppose you are tasked with coming up with a

2. a. Suppose you are tasked with coming up with a firm's weighted average cost of capital to be used to evaluate a project that has the same risk as the firm's overall cash flows. You have collected the following information: The risk-free rate is 3% and the estimated Beta is 1.2 The market risk premium is 5%. The price per share is $50, and there are 2 million shares outstanding. The Book Value of Debt is $50 million and is currently selling at 95% of Face Value. It is priced to yield 5%. Assume a tax rate of 35% a.Calculate the firm's overall weighted average cost of capital. b.Explain the weighted average cost of capital equation. How you would estimate the various components, what do they reflect? When would a firm use Rwacc

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