CoffeeStop primarily sells coffee. It recently introduced a premium coffee-flavoured liqueur. Suppose the firm faces a
Posted: Sat Nov 27, 2021 5:15 pm
CoffeeStop primarily sells coffee. It recently introduced a
premium coffee-flavoured liqueur. Suppose the firm faces a
tax rate of 38% and collects the following information.
If it plans to finance 15% of the
new liqueur-focused division with debt and the rest
with equity, what WACC should it use for its
liqueur division? Assume a cost of debt
of 5.4%, a risk-free rate of 3.4% and a
risk premium of 5.4%.
Beta
% Equity
% Debt
CoffeeStop
0.61
96%
4%
BF Liqueurs
0.28
85%
15%
The weighted average cost of capital is____%. (Round to
two decimal places.)
premium coffee-flavoured liqueur. Suppose the firm faces a
tax rate of 38% and collects the following information.
If it plans to finance 15% of the
new liqueur-focused division with debt and the rest
with equity, what WACC should it use for its
liqueur division? Assume a cost of debt
of 5.4%, a risk-free rate of 3.4% and a
risk premium of 5.4%.
Beta
% Equity
% Debt
CoffeeStop
0.61
96%
4%
BF Liqueurs
0.28
85%
15%
The weighted average cost of capital is____%. (Round to
two decimal places.)