Question
You wish to find the appropriate WACC to use for a capital project with a projected ten-year life. The project has the same risk as
You wish to find the appropriate WACC to use for a capital project with a projected ten-year life. The project has the same risk as the overall firm. The beta of the firm's equity is 1.1 and you estimate the market risk premium to be 8%. The firm recently issued a ten-year bond with a yield to maturity of 8.1%. The three-month treasury bill yields 1%, and a federal government ten-year bond yields 4%. The firm's corporate tax rate is 35.1%. The current debt/equity ratio of the firm is 1, and the firm plans to fund the factory with the same financing mix. Calculate the appropriate WACC for this project.
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
8th Edition
1285190904, 978-1305176348, 1305176340, 978-1285190907
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