09 May IF THE CORPORATE TAX RATE IS 37% WHAT IS THE WEIGHTED AVERAGE COST OF CAPITAL (WACC) FOR THIS FIRM?
The current stock price for a company is $44 per share and there are 8 million shares outstanding. The beta for this firms stock is 1.2 the risk-free rate is 4.8 and the expected market risk premium is 6.1%. This firm also has 100 000 bonds outstanding which pay interest semiannually. These bonds have a coupon interest rate of 8% 27 years to maturity a face value of $1 000 and an annual yield to maturity of 7.8%. If the corporate tax rate is 37% what is the Weighted Average Cost of Capital (WACC) for this firm?
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