The Home Depot wants to raise new capital to compete better with Lowe’s. You are the...
- The Home Depot wants to raise new capital to compete better
with Lowe’s. You are the finance manager for Home Depot and your
CEO has asked you to calculate the weighted average cost of capital
(WACC) for The Home Depot. You plan to use a mix of debt and equity
as follows: 40% equity and 60% debt. The interest rate applicable
to debt is 6%. The CAPM cost of equity is 3%. What would you tell
your CEO is the WACC for Home Depot?
- 4.3%
- 4.8%
- 4.2%
- 3%
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