Calculate the companys weighted-average cost of capital

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Whispering Pines, Inc. is all-equity-financed. The expected rate of return on the shares is 12%. Calculate the opportunity cost of capital for an average-risk Whispering Pines investment. Next, suppose the company issue debt, repurchases shares, and moves to a 30% debt to value ratio (D/V=.30).

Calculate the company's weighted-average cost of capital at the new capital structure. The borrowing rate is 7.5% and the tax rate is 35%.

Based on the WACC calculation, provide a one -to -two page paper summarizing your recommendations for Whispering Pines.

Reference no: EM13845731

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