Max, Inc has $2.4 billion in assets and a debt-equity ratio of 6.0. Max has a beta of 1.35 and its cost of debt is estimated to be about 6.5%. What is Max's WACC? Suppose Max's debt-equity ratio increases to 1.0. What will be its cost of equity? What will be its WACC? Risk-free rate=4%, MRP=7%.
MMD, Co. is a privately-held firm. In its industry the average beta is 1.60 and the average amount of leverage shows a debt-asset ratio of about .50. MMD employs less leverage-a debt asset ratio of about .25. Both the industry and MMD have a cost of debt of about 6.0%. What should be MMD cost of equity? What should its WACC be?