medium · Investment Banking valuation-core
A firm has a target D/V (Debt-to-Total-Value) ratio of 40%. The risk-free rate is 2.50% and the equity risk premium is 6.50%. The firm's levered beta is 1.20 and its pre-tax cost of debt is 5.00%. If the corporate tax rate is 20%, calculate the WACC.
- 7.15%
- 7.78%
- 9.20%
- 8.18%
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