We are analyzing Sailing Boat Co and we have the following information:

• The company has a total EV of 5,000 million Eur of which the Weight of Equity is 90% and the Weight of Debt is 10%.
• The stock has a beta of 0.83.
• The required equity return for the market is 7.5% and the risk-free rate of return is 2.5% percent.
• The company has bonds that are offering a YTM of 4.0%.
• The corporate tax rate is 32%.

Using CAPM approach for the cost of equity, what is the appropriate WACC (Weighted Average Cost of Capital) for Sailing Boat Co.?

 

Answer rating: 100% (QA)

Calculating the WACC for Sailing Boat Co using CAPM Heres how to calculate the WACC for ... View the full answer