A company has $400 million worth of debt outstanding with an average interest rate of 5% and
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Question:
A company has $400 million worth of debt outstanding with an average interest rate of 5% and 50 million common shares outstanding worth $12 each. The company's tax rate is 28%, beta is 1.3, the yield on 10-year Treasury notes is 1.5% and the expected market return is 9.5%. What is the company's weighted average cost of capital (WACC) based on the current weights for debt and common stock in its capital structure?
Expert Answer:
To calculate the WACC we need to calculate the cost of debt and the cost of equity and then use thei... View the full answer
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