What is cost of equity capital

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A common stock of a company has a beta of 0.8 , the Treasury bill rate is 4% and the market risk premium is estimated at 7%. Capital structure is 30% debt paying a 5% interest rate, and 70% equity.

What is theirs cost of equity capital (from CAPM) and its WACC? Tax rate is 35% ANS= 7.695%

One project in particular the company is evaluating has an internal rate of return of 12%. Should it accept the project? The project will generate a cash flow of $100,000 per year for 7 years. What is the most the company would be willing to pay to initiate the project?

Step-by-step explanation Needed to show how to use PV formula to get answer of rate of 7.695%, 7 years, and PMT of -100 = $ 526,112.35

Reference no: EM132711481

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