Abby Company WACC E(rm) 10% Cost of debt, rD 8% Corporate tax rate, Tc 30% Cov(rAbby,TM)...

 

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Abby Company WACC E(rm) 10% Cost of debt, rD 8% Corporate tax rate, Tc 30% Cov(rAbby,TM) 0.13 Debt, D 1,500,000 Var(rm) 0.11 Risk-free rate, rf 3% Equity, E 3,000,000 Section a. Finding the company cost of equity. Equity beta, B Cost of equity, re 5 7 Section b. Finding the company WACC. 3. V=D+E 9 WACC 0 Abby Company WACC E(rm) 10% Cost of debt, rD 8% Corporate tax rate, Tc 30% Cov(rAbby,TM) 0.13 Debt, D 1,500,000 Var(rm) 0.11 Risk-free rate, rf 3% Equity, E 3,000,000 Section a. Finding the company cost of equity. Equity beta, B Cost of equity, re 5 7 Section b. Finding the company WACC. 3. V=D+E 9 WACC 0

Answer rating: 100% (QA)

a To find the companys cost of equity we can use the Capital Asset Pricing Model CAPM formula ... View the full answer