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What is BCCI cost of equity capital

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Question - The common stock of Buildwell Conservation & Construction, Inc. (BCCI), has a beta of .8. The Treasury bill rate is 4% and the market risk premium is estimated at 7%. BCCI's capital structure is 30% debt paying a 5% interest rate and 70% equity.

1. What is BCCI's cost of equity capital and its WACC?

2. Buildwell's tax rate is 35%. Should BCCI accept a project with an IRR of 12%? Explain why.

Reference no: EM133130168

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