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Compute the WACC for company

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Question - Compute the WACC for company 123. Market value of its debt is 400 mm: market value of its equity is 300mm: stock is currently priced at $20 per share and pays an annual dividend of $0.75 in next year. The annual dividend payment is expected to grow at 1%. Bond rating is A and and maturity is 10 years. 10-year Treasuries yield 2%. The average yield spread between 10-year Treasury and 10-year A-rated corporate bonds is around 121 basis points or 1.21%. The firm's tax rate is 40%.

Reference no: EM133078411

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