There are no terminal values for the projects:

Current debt is $100 million (at 7%) and current equity is $300 million.

The treasury rate is 4%, AAA rated bonds are trading at 7%, the company tax rate is 35%, and current levered beta is 1.40.

Questions:

What is the expected market return?

What is the expected rate of return?

What is the cost of equity?

What is WAAC?

Answer rating: 100% (QA)

To answer the questions well calculate the expected market return expected rate of return cost of equity and weighted average cost of capital WACC usi... View the full answer