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Business, 24.05.2021 19:50 xcapo1x

Using Capital Asset Pricing Model (CAPM) to recalculate Company A's cost of equity. Then, find the MAXIMUM cost of debt for Company A above to borrow money. You have to use the same WACC you calculated from Problem 5 above to do this problem. 10-year Treasure Bond Annual Rate of Return = 3.00% Stock Beta value = 1.25 S&P 500 Index Expected annual rate of return = 10% Marginal Income Tax Rate = 35% Proportion of Debt to Total Capital = 60% a. 6.10% b. 5.25% c. 5.84% d. 7.05% Problem 5 Company A's cost of capital information is as follows: Stock price per share = 120 Expected Dividends to be paid = Expected growth rate = 2% Debt to total captial ratio = Margin tax rate = 35% Cost of debt = Calculate Company A's after tax WACC. a. 6.10%
b. 7.35%
c. 6.75% 12 60% 5%
d. 6.94%

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Using Capital Asset Pricing Model (CAPM) to recalculate Company A's cost of equity. Then, find the M...
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