What is its wacc based on book value

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Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm's noncallable bonds have a yield to maturity of 8%. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) Its capital structure includes $40 million debt and $10 million common equity. The firm uses the CAPM to estimate the cost of equity. What is its WACC based on book value?

Reference no: EM132016040

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