Please use the following information to answer this question: · Walmart can borrow at an after-tax interest rate of 2.87
Posted: Sat Nov 27, 2021 5:19 pm
Please use the following information to answer this
question:
· Walmart can borrow at an after-tax interest rate of 2.87%.
· Walmart’s beta is .48.
· The required return on the risk-free 10-year bond is 2.5%.
· The market or equity risk premium which is the excess that
stocks must pay over the risk-free rate or (Re – Rf) is 5%.
· Walmart is financed with 20% debt and 80% with equity.
Using this information, please calculate Walmart’s cost of
capital to a percentage with two decimals (for example 1.87%).
question:
· Walmart can borrow at an after-tax interest rate of 2.87%.
· Walmart’s beta is .48.
· The required return on the risk-free 10-year bond is 2.5%.
· The market or equity risk premium which is the excess that
stocks must pay over the risk-free rate or (Re – Rf) is 5%.
· Walmart is financed with 20% debt and 80% with equity.
Using this information, please calculate Walmart’s cost of
capital to a percentage with two decimals (for example 1.87%).