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How determine what is the weighted average cost of capital

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Reference no: EM132961828

Given the following data:

Data:

Market value of Stock = $750 Million

Market value of Debt = $600 Million

Corporate Tax rate = 36%

Currently Bonds are selling at par value and the Bonds are paying a 6% coupon

The beta of the firm's equity is 2.25. The market return is 15% the risk-free rate is 3%

Problem 1) What is the weighted average cost of capital?

Problem 2) If a project has a standard set of cash flows and the IRR is 22% should this firm accept or reject that project?

Reference no: EM132961828

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