An analyst gathered the following information regarding Moon Traders:

Current market share price = $55

Riskfree rate = 6%

Current market risk premium = 7%

Beta of stock = 1.4

Target debttoequity ratio = 0.4

The company has a capital structure that includes BBrated bonds with five years to maturity. The yieldtomaturity on a comparable BBrated bond with a similar term to maturity is 8%. Given that the company's marginal tax rate is 40%, what is the weighted average cost of capital ?

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC for Moon Traders we need to consider the cost ... View the full answer