Compute the expected return of akron’s equity

Reference no: EM131414033

The Akron Company consists of $50 million in perpetual riskless debt and $50 million in equity. The current market value of its assets is $100 million and the beta of its equity return is 1.2. Assume the risk-free rate is 8 percent, the expected return of the market portfolio is 13 percent per year, and the CAPM is true. Compute the expected return of Akron's equity and its WACC assuming a 40 percent corporate tax rate.

Reference no: EM131414033

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