A firm has 80 million in debt and 60 of its capital, Financial Management

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A firm has 80 million in debt and 60 of its capital

A firm has $80 million in debt and 60% of its capital structure consists of common equity. The firm has no preferred stock. The firm’s bonds have YTM of 8.5%, and the firm is subject to a 30% corporate tax rate. The firm has common stock with a beta of 1.25. The risk free rate on Treasury bills is 4% and the expected market risk premium is 10%. What is the after-tax WACC for the firm?

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Financial Management: A firm has 80 million in debt and 60 of its capital

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Financial Management: A firm has 80 million in debt and 60 of its capital

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