The classic capm and the tax-adjusted capm

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Reference no: EM131972849

(CAPM/ WACC) Consider a company which has βequity = 1.5 and Bdebt = 0.4. Suppose that the risk-free rate of interest is 6%, the expected return on the market E (rM) = 15%, and that the corporate tax rate is 40%. If the company has 40% equity and 60% debt in its capital structure, calculate its weighted average cost of capital using both the classic CAPM and the tax-adjusted CAPM.

Reference no: EM131972849

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