As an Analyst, you were tasked to compute for the Weighted Average Cost of Capital of various companies

given the following information. Income Tax rate is 25%.

Ariana Corp Selena Corp. Taylor Corp.

Risk Free rate 4.00% 3.00% 2.00%

Beta 1.25 1.50 1.30

Market Return 12.00% 11.00% 10.00%

Debt to Equity ratio 2.5 3 4

Credit Spread (in Basis points/ BPS/ 1= .01%) 200 300 250

16. What is the cost of equity of Ariana Corp?

A. 14%

B. 15%

C. 12.40%

D. 9.80%

17. What is the after tax cost of debt of Taylor Corp?

A. 4.50%

B. 3.38%

C. 3.75%

D. 4%

18. What is the WACC of Selena Corp?

A. 7.21%

B. 7.13%

C. 5.18%

D. 5.09%

For question 19-20:

Compute for the missing figures using CAPM Method:

Ariana Corp Selena Corp. Taylor Corp. Olivia Corp.

Risk Free rate ? 3.00% 4.00% 5.00%

Beta 1.25 ? 1.30 1.40

Market Return 12.00% 11.00% ? 8.00%

Cost of Equity 14.50% 15.00% 11.80% ?

19. Which company has the highest beta?

A. Olivia Corp

B. Taylor Corp

C. Selena Corp

D. Ariana Corp

20. Which company has the lowest cost of equity?

A. Ariana Corp

B. Selena Corp

C. Taylor Corp

D. Olivia Corp