hard · Investment Banking
A company is calculating its WACC. The risk-free rate is 4.0%, the company's Beta is 1.20, and the Equity Risk Premium is 5.0%. The pre-tax cost of debt is 6.0% and the tax rate is 25%.
If the target capital structure is 60% Equity and 40% Debt, what is the WACC?
- 10.0%
- 7.8%
- 7.2%
- 8.4%
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