A company has a 50/50 mix of Debt and Equity.  The YTM on it's debt is 7.5%.  The risk free interest rate (10 year) is 4.5%.  Tax rates are 20%.  The company's expected return on Equity is 12.5%.  What is the company's WACC

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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A company has a 50/50 mix of Debt and Equity.  The YTM on it's debt is 7.5%.  The risk free interest rate (10 year) is 4.5%.  Tax rates are 20%.  The company's expected return on Equity is 12.5%.  What is the company's WACC?

A company has a 50/50 mix of Debt and Equity. The YTM on it's debt is 7.5%. The
risk free interest rate (10 year) is 4.5%. Tax rates are 20%. The company's expected
return on Equity is 12.5%. What is the company's WACC?
10%
8.65%
9.25%
8.5%
Transcribed Image Text:A company has a 50/50 mix of Debt and Equity. The YTM on it's debt is 7.5%. The risk free interest rate (10 year) is 4.5%. Tax rates are 20%. The company's expected return on Equity is 12.5%. What is the company's WACC? 10% 8.65% 9.25% 8.5%
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