Estimate weighted average cost of capital assuming tax rate

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Reference no: EM13725542

The market value of NPU Ice Creamery equity is $8 million and the market value of its debt is $6 million, with book value of debt at $2 million and the book value of equity at $2.5 million. The CFO estimates that the beta of the stock current is 1.43 and that the expected risk premium on the market is 8%. The Treasury bill rate is 3%. The coupon rate on the company's debt is 5%, and the Yield to Maturity is 5.5%.

Required: Estimate the Weighted Average Cost of Capital assuming a tax rate of 40%.

Show all the calculation (if possible in excel)

Reference no: EM13725542

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