Using CAPM compute the cost of equity financing

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Reference no: EM13808017

ABC is a manufacturer.

Long term debt, with an incremental borrowing rate of 6%

Capital stock with the following information

Risk free rate 4%, market rate of return 12%, Beta 1.25.

Long term debt 40% of total financing

capital stock 60% of total financing

Corporation tax rate is 40%

Using CAPM compute the cost of equity financing?

Compute the weighted average cost of capital (WACC)?

Reference no: EM13808017

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