Question

You need to estimate a WACC for a firm whose asset (unlevered) beta is 1. The...

You need to estimate a WACC for a firm whose asset (unlevered) beta is 1. The firm will be 50% debt financed and its cost of debt will be 7% based on a debt beta of 0.25 and a market risk premium of 8%.

If the firm's corporate tax rate is 40%, what is the firm's WACC?

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

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