Homework Answers
WACC = weight of debt * after tax cost of debt + weight of equity * cost of equity
Expected return = risk free rate + beta * market risk premium
= 8% + 0.54 * 6%
= 11.24%
WACC = 0.44 * 8% * (1-0.35) + 0.56 * 11.24%
= 8.58%
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