A company has a 50/50 mix of Debt and Equity. The YTM on it's debt is 7.5%. The risk free interest rate (10 year) is 4.5%. Tax rates are 20%. The company's expected return on Equity is 12.5%. What is the company's WACC

A company has a 50/50 mix of Debt and Equity. The YTM on it's debt is 7.5%. The risk free interest rate (10 year) is 4.5%. Tax rates are 20%. The company's expected return on Equity is 12.5%. What is the company's WACC

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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Question

A company has a 50/50 mix of Debt and Equity. The YTM on it's debt is 7.5%. The
risk free interest rate (10 year) is 4.5%. Tax rates are 20%. The company's expected
return on Equity is 12.5%. What is the company's WACC?
10%
8.65%
9.25%
8.5%

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