Question 1: How can an organization lower its WACC?
Question 2: Lizpaz Inc. is a levered firm with a debt-to-equity ratio of 0.25. The beta of the common stock is 1.15, while the beta of the debt is 0.3. The market-risk premium is 10 percent and the risk-free rate is 6 percent. The corporate tax rate is 35 percent.
What is the firm's cost of equity capital?
If a new company project has the same risk as the overall firm, what is the weighted average cost of capital for the project?
Question 3: Adobe Online Inc. has an equity beta of 1.29 and a debt-to-equity ratio of 1.0. The expected return on the market is 13 percent and the risk-free rate is seven percent. The before-tax cost of debt capital is 7 percent. The corporate tax rate is 35 percent.