Problema company is 46 financed by risk free debt the, Ask an Expert

Accounting

Problem:

A company is 46% financed by risk free debt. The interest rate is 11%, the expected market risk premium is 9%, and the beta of the company's common stock is 0.56.

Required:

Question 1: What is the company cost of capital?

Question 2: What is the after tax WACC, assuming that the company pays tax at a 40% rate?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91171516

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