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What is amresh wacc

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Reference no: EM132623263

Amresh is interested in estimating the company's WACC and has collected the following information:

The company has bonds outstanding that mature in 20 years with an annual coupon of 7.5 percent. The bonds have a face value of $1,000 and sell in the market today for $950.

The risk-free rate is 7 percent.

The market risk premium is 6 percent.

The stock's beta is 1.2.

The company's tax rate is 40 percent.

The company's target capital structure consists of 60 percent equity and 40 percent debt.

Question 1: The company uses the CAPM to estimate the cost of equity and does not include flotation costs as part of its cost of capital. What is Amresh WACC?

Reference no: EM132623263

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