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A company is 39% financed by risk-free debt. The interest rate is 10%, the expected market risk premium is 8%, and the beta of the company’s common stock is 0.60.

a. What is the company cost of capital? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Cost of capital % =

b. What is the after-tax WACC, assuming that the company pays tax at a 40% rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

After-tax WACC %=

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91626365

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