What are your weights-what is your cost of equity

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Reference no: EM131928817

Your firm is about to engage in a capital budgeting project having the same business risk and debt capacity as the firm. Your job is to estimate the cost of capital for the project. The firm's tax rate is 30% and you are given the following information: The firm has debt outstanding with a book value of $500,000 The firm's balance sheet indicates total shareholders' equity of $1,000,000. The firm has 100,000 shares outstanding with a current market price of $15 per share. The company's stock has a beta of .90. The current Treasury Bill rate is 3.5% The historical difference between Treasury Bill rates and common stocks has been around 5.5%. The company's debt has a coupon of 6%, matures in 10 years, and is currently priced at 100. In calculating your cost of capital, What are your weights? What is your cost of equity? What is your cost of debt? What is your WACC. Recall that WACC = Rd x(1 - t) x Wd + Re x We

Reference no: EM131928817

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