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Develop the weighted average cost of capital

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Reference no: EM131205815

Develop the Weighted Average Cost of Capital (WACC) for a business. 

Given the following inputs and assumptions, estimate the WACC for Gallo Distributors, Inc.:

  • Risk-free rate: 1%
  • Equity risk premium: 5%
  • Beta: .85
  • Size Premium: 6%
  • Company Specific Risk Premium: 1%
  • Pre-tax borrowing rate: 5.5%
  • Fair Market Value of Debt to Fair Market Value of Invested Capital: 20%

Reference no: EM131205815

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