Problem 18-4 WACC If Wild Widgets, Inc., were an all-equity company, it would have a beta of 95. The company has a targe

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Problem 18 4 Wacc If Wild Widgets Inc Were An All Equity Company It Would Have A Beta Of 95 The Company Has A Targe 1 (83.51 KiB) Viewed 19 times

Problem 18-4 WACC If Wild Widgets, Inc., were an all-equity company, it would have a beta of 95. The company has a target debt-equity ratio of 80. The expected return on the market portfolio is 12 percent and Treasury bills currently yield 3.7 percent. The company has one bond issue outstanding that matures in 21 years, a par value of $1,000, and a coupon rate of 6.6 percent. The bond currently sells for $1,080. The corporate tax rate is 24 percent. Бок rences a. What is the company's cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company's weighted average cost of capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % a. Cost of debt b. Cost of equity WACC % %