You are a business advisor for Teddy Bears Corporation. You were asked to help find company discount rate. The company has a loan of $10 million with 5% interest. The company's 200,000 common stocks are traded at $56 per share. The beta of the stocks is 1.02. The effective corporate tax rate is 28%. The market risk premium is given as 6.2%, and the current Treasury bill rate is 3.4%.

Calculate the discount rate the company will use to evaluate its projects.

Answer rating: 100% (QA)

To calculate the discount rate we need to use the weighted average cost of capital WACC formula whic... View the full answer