What is the pistol? division wacc

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Reference no: EM131920364

Colt Manufacturing has two? divisions: 1)? pistols; and? 2) rifles. Betas for the two divisions have been determined to be beta (pistol)=0.8 and beta ?(rifle)=1.3. The current?risk-free rate of return is 3?%, and the expected market rate of return is 8%. The? after-tax cost of debt for Colt is 5.5?%. The pistol? division's financial proportions are 35.0% debt and 65.0?% equity, and the rifle? division's are 45.0?% debt and 5.0?% equity.

a. What is the pistol? division's WACC?

b. What is the rifle? division's WACC?

Reference no: EM131920364

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