What is the required return on starbucks debt

Reference no: EM13263498

You have decided to acquire Starbucks. Assume that Starbucks' capital structure consists of 80% equity and 20% debt, and that the beta on Starbucks' equity is 1.0. Assume that Starbucks pays no taxes. Also assume that CAPM holds and that the risk-free rate is 4% and the market risk premium is 8%. Suppose Starbucks' weighted average cost of capital is 10.6%. What is the required return on Starbucks' debt?

Reference no: EM13263498

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