Determine company weighted average cost of capital


If Wild Widgets, Inc., were an all-equity company, it would have a beta of 1.1. The company has a target debt-equity ratio of 0.40. The expected return on the market portfolio is 13 percent, and Treasury bills currently yield 7 percent. The company has one bond issue outstanding that matures in 20 years and has a 9 percent coupon rate. The bond currently sells for $975. The corporate tax rate is 34 percent. What is the company's weighted average cost of capital?

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Finance Basics: Determine company weighted average cost of capital
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