What is the company's WACC?

Question

The following information applies to the Coetzer Company:

· Coetzer has a target capital structure of 40% debt and 60% common equity.

· Coetzer has 15-year, 12% annual coupon bonds that have a face value of $1,000 and sell for $1,150.

· The risk-free rate is 5%. The market risk premium (RPM) is also 5%.

· Coetzer's common stock has a beta of 1.4.

· Coetzer's tax rate is 40%.

What is the company's WACC?

Answer 1

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