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What is the wacc for the project if you were mr consultant

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Question - Dalton Ltd has hired a consultant to calculate cost of capital for a new project. The information provided to the consultant is given below. The company has a debt-to-equity ratio of 0.75. The cost of debt is 9.0% (before tax) and the corporate tax rate is 35.0%. The industry average equity beta is 1.2 and the industry average debt-to-equity ratio is 0.60. It is found that 3-year maturity and 10-year maturity GoI bonds YTM are 6.15% and 6.50% respectively. The expected return on the Nifty 50 index is 12.0%. The project has the same business risk as the overall firm. What is the WACC for the project if you were Mr. Consultant?

Reference no: EM133176518

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