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Estimate the WACC

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Reference no: EM133091125

Question - The firm's market value of debt was $1.3 billion and market value of equity was $1.5 billion. The company's cost of equity is estimated to be 6.5% and the market risk premium was 7%. If the Treasury bill rate was 2.5%, the current yield-to-maturity of the company's bond was 5.0% and the coupon rate of the company's bond was 3%. Assume corporate tax rate was 21%, estimate the WACC (i.e., the company cost of capital)?

Reference no: EM133091125

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