What is bcci cost of equity capital

Reference no: EM131956549

Question: The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of .9. The Treasury bill rate is 4%, and the market risk premium is estimated at 7%. BCCI's capital structure is 37% debt, paying an interest rate of 6%, and 63% equity. The debt sells at par. Buildwell pays tax at 40%.

a. What is BCCI's cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Cost of equity capital= ______ %

b. What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

WACC= ____ %

c. If BCCI is presented with a project with an internal rate of return of 10%, should it accept the project if it has the same level of risk as the current firm?

Yes or No?

Reference no: EM131956549

Questions Cloud

Effective medical benefits while also controlling cost : How do you provide effective medical benefits while also controlling the cost?

Calculating the capital structure weights : Common shares of App Invent Inc. have a beta of 0.9.The market risk premium is 8 percent, and T-bills are currently yielding 1 percent.

What is the market rate of return on the stock : The common stock of Eddie's Engines, Inc. sells for $27.81 a share. The stock is expected to pay $2.70 per share next year.

What are the types of tickets and servers used in kerberos : ITNE 2002 - Key Distribution and User Authentication - Explain how you can achieve the same thing - What are the types of tickets and servers used in Kerberos

What is bcci cost of equity capital : The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of .9. The Treasury bill rate is 4%, and the market risk premium is estimated.

What was the flotation cost as a percentage of funds raised : The Collins Co. has just gone public. Under a firm commitment agreement, the company received $33.80 for each of the 4.28 million shares sold.

How much must save at end of each month before retirement : Collette wants to retire 30 years from now with enough money that she can take out $2, 500 at the beginning of each month for 20 years.

Calculate the earnings after taxes : Colter Steel has $5,100,000 in assets. Temporary current assets $ 2,200,000 Permanent current assets 1,560,000 Fixed assets 1,340,000 Total assets $ 5,100,000.

What are principal ingredients of a public-key cryptosystem : ITNE - 2002 - Public Key Cryptography and Message Authentication - What is a message authentication code and Briefly describe the three schemes

User Account

All Pages