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What is? thunderhorse weighted average cost of? capital

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Thunderhorse Oil is a U.S. oil company. Its current cost of debt is 7.00?%, and the? 10-year U.S. Treasury? yield, the proxy for the? risk-free rate of? interest, is 3.40?%. The expected return on the market portfolio is 8.00?%. The? company's effective tax rate is 42?%. Its optimal capital structure is 70?% debt and 30?% equity.

Problem 1: If? Thunderhorse's beta is estimated at 1.30?, what is? Thunderhorse's weighted average cost of? capital?

Problem 2: If? Thunderhorse's beta is estimated at 1.00?, significantly lower because of the continuing profit prospects in the global energy? sector, what is? Thunderhorse's weighted average cost of? capital?

Reference no: EM132841085

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