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Estimate the firm cost of capital-wbs plc

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WBS Plc. has a market capitalization of GBP100 billion and in equity beta of 0.8. It has GBP25billion of bonds rated ?B' by S&P with a yield to maturity of 7.1%. Assuming a market risk premium of 5%, a risk-free rate of 2.5%, a default rate of 5.5% for B-rated bonds and an average loss rate of corporate bonds of 60%, estimate the firm's cost of capital.

Reference no: EM132674731

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