What alphabet weighted average cost of capital

Assignment Help Accounting Basics

Reference no: EM132759225

Problem 1: Alphabet, Inc. (GOOGL) has a 40 percent debt/asset ratio; assume a tax rate of 16 percent. The average yield to maturity on GOOGL's bonds is 3 percent. Your market analyst estimates that the risk-free rate is 1 percent and that the market risk premium is 7 percent. The firm's beta coefficient is 0.97. What's Alphabet's weighted average cost of capital (WACC)? (Round to the nearest tenth of a percent.)

A. 6 percent

B. 5.7 percent

C. 5.9 percent

D. 7.3 percent

Problem 2: The Shoe Outlet has paid annual dividends of $.65, $.70, $.72, and $.75 per share throughout the last four years, respectively. The stock is currently selling for $9 a share. What's this firm's cost of equity?

A. 11.79 percent

B. 9.53 percent

C. 13.65 percent

D. 8.74 percent

Reference no: EM132759225

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