question archive Suppose a firm is funded by 50% debt and 50% equity
Suppose a firm is funded by 50% debt and 50% equity
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Suppose a firm is funded by 50% debt and 50% equity. Its cost of debt is 6%, and has the equity beta of 1.5. If the current risk-free government bond rate is 3%, what is the company's estimated after-tax WACC? Assume the equity market risk premium is 5% and the firm faces 30% tax rate.
