Spartan Machinery stock trades at $50 per share with a beta of 1.6, an estimated market return of 14%, and a risk free rate of 6%. There are 20 million shares outstanding. The company has bonds with a face value $1 billion outstanding and a market value of $950 million. The coupon rate is 8% (semiannual coupons) and there are 15 years to maturity. The company has a tax rate of 40%. 

What is the WACC?

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC we need to consider the cost of equity and the cost of debt weighted by their respective propor... View the full answer