Pricing model to estimate the cost of equity capital

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Reference no: EM131958996

Calculate the cost of capital for operations (WACC) for ACME, Inc. Use the capital asset pricing model to estimate the cost of equity capital.

U.S. Government long-term bond rate 2.80%

Market risk premium 5.00%

Equity beta 1.04

Per-share market price $65.00

Shares outstanding 20.0 million

Net financial obligations on balance sheet $700.0 million

Weighted-average borrowing cost 7.6%

Statutory tax rate 21.0%

Reference no: EM131958996

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