Determining the market risk premium

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Reference no: EM131044577

Dittmer Inc. has the following information.

(1) The firm's semiannual bonds mature in 20 years which were issued 5 years ago, have an 8.00% coupon, a par value of $1,000, and a market price of $1,050.00.

(2) The company's tax rate is 40%.

(3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20.

(4) The target capital structure consists of 35% debt and the balance is common equity.

Dittmer's WACC is ___________%. Answer in percentage, rounded to two decimal places

Reference no: EM131044577

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