Messsn co a us firm borrows us funds at an interest rate of, Ask an Expert

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Messsn Co. (a U.S firm) borrows U.S Funds at an interest rate of 10 percent per year. Its beta is 1.0. The long-term annualized risk-free rate I the United States is 6 percent. The stock market return the United States is expected to be 16 percent annually. Messan’s target capital structure is 40% debt and 60% equity. Messan Co. is subject to a 30% corporate tax rate. Estimate the cost of capital to Messan Co.

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