PART $2-$COMPUTING WACCWITH CAPM

This problem has NO relation to the problem in Part $1($except that you must enter all answers in Excel formulas$)$

The current risk$-$free rate is $5\mathrm{.}51\%$ and the market is expected to return $9\mathrm{.}75\%$ per year. The company's beta is $1\mathrm{.}28.$ The company expects to pay $6\mathrm{.}8\%$ for its debt. the target capital structure for the company is $45\%$ equity and $55\%$ debt. The marginal tax rate is $35\%$ plus $4\%$ for state and local taxes $($ISTR $=39\%).$

A$.$ What is the after$-$tax cost of debt $($use the short$-$cut$)?$

B$.$ What is the cost of equity?

C$.$ Calculate the WACC.

Answer A

Answer B

Answer C

CAPM Inputs

$\backslash$table$[[$rF$,],[$rM$,],[$Beta$,],[$Cost$/$Debt$,],[$ISTR$,]]$

Capital Structure

$\backslash$table$[[$Debt$,],[$Equity$,]]$ This is just for practice!

WACC