Question
The B.B. Lean Co. has 1.4 million shares of stock outstanding. The stock currently sells for $20 per share. The firm's debt is publicly traded
The B.B. Lean Co. has 1.4 million shares of stock outstanding. The stock currently sells for $20 per share. The firm's debt is publicly traded and was recently quoted at 93 percent of face value. It has a total face value of $5 million, and it is currently priced to yield 11 percent. The risk-free rate is 8 percent, and the market risk premium is 7 percent. You've estimated that Lean has a beta of .74. If the corporate tax rate is 34 percent, what is the WACC of Lean Co.?
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Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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032459237X, 978-0324592375
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