Compute the cargill cost of capital

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Reference no: EM133120122

Cargill is generally considered to be the largest privately held company in the world. Headquartered in Minneapolis, Minnesota, the company has been averaging sales of over $113 billion per year over the past 5 year period. Although the company does not have publicly traded shares, it is still extremely important for it to calculate its weighted average cost of capital properly in order to make rational decisions on new investment proposals.

Assuming the following, what would be Cargill's Cost of Capital?

Beta: 0.98

Risk-Free Rate: 2.73%

Market Risk Premium: 8.02%

Average Cost of Debt: 7.01%

Tax Rate: 38%

Equity Percentage in Capital Structure: 68

Reference no: EM133120122

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