Solution-Planning to replace five machines

Planning to replace five machines

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Reference no: EM131751268

XYZ Co. is planning to replace five machines. Each new machine will cost $100,000. The supplier will trade in old machines and will deduct $150,000 from the total purchase price of new machines. The corporate tax rate is 30%. Based on the risk, the bank will charge 6% on the loans granted for the machines. The company will use 70% equity financing and 30% debt financing. The company beta (A) is 0.90, risk free return (Rf) is 1%, and return on the market portfolio (E(RM)) is 8%.

Calculate the WACC.

Reference no: EM131751268

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Planning to replace five machines : XYZ Co. is planning to replace five machines. Each new machine will cost $100,000. The supplier will trade in old machines and will deduct $150,000

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Planning to replace five machines

Reference no: EM131751268

Reference no: EM131751268

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