Sunshine Corp hired a new CFO and changed firm's policy from zero leverage to some leverage. They decided to add enough leverage till the firm value increased by 20%. Assume cashflows are level perpetual.

 

Use data below:

 

Risk Free Rate=5%

 

Market Return=12%

 

Unlevered Beta=1.5

 

Unlevered Cost of Capital=15.5%

 

Find Sunshine's WACC with leverage


Part 1

Sunshine's WACC with leverge is ?

Answer rating: 100% (QA)

To find Sunshine Corps weighted average cost of capital WACC with leverage we need to calculate the ... View the full answer