Each year Briggs & Stratton (producer of gasoline engines) estimates its own company- wide weighted average...

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Each year Briggs & Stratton (producer of gasoline engines) estimates its own company- wide weighted average cost of capital. In 2001, it based its calculation on the following assumptions (info taken from Keown, et al, Financial Management, p. 394): Risk-free rate is weighted average of 30-year govt bond interest rates from 2001 = 6.1% Beta is estimated by Value Line = 0.83 Market premium is historical average difference between equities and LT bonds = 6% Cost of debt is estimated by the company = 7.5% Tax rate is estimated by the company = 38% Capital structure is based on target debt to total capital ratio = 23% Based on Briggs & Stratton's assumptions, what is their WACC for 2001? Each year Briggs & Stratton (producer of gasoline engines) estimates its own company- wide weighted average cost of capital. In 2001, it based its calculation on the following assumptions (info taken from Keown, et al, Financial Management, p. 394): Risk-free rate is weighted average of 30-year govt bond interest rates from 2001 = 6.1% Beta is estimated by Value Line = 0.83 Market premium is historical average difference between equities and LT bonds = 6% Cost of debt is estimated by the company = 7.5% Tax rate is estimated by the company = 38% Capital structure is based on target debt to total capital ratio = 23% Based on Briggs & Stratton's assumptions, what is their WACC for 2001?

Answer rating: 100% (QA)

Here Risk free rate Rf 61 Beta of stock 083 Market risk premium MRp 6 C... View the full answer