Brooker Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained...

Brooker Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm's bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and 65% common equity. The firm uses the CAPM to estimate the cost of equity. What is its WACC?

		7.16%
		7.54%
		7.93%
		8.35%
		8.79%

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please find attached answer

jeff jeffy answered 1 year ago

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