Planet Express has $300 of equity and $500 of assets. The average YTM on its debt...

Planet Express has $300 of equity and $500 of assets. The average YTM on its debt is 10% and the tax rate is 20%. The company has announced $1 annual dividends in perpetuity and has a stock price of $10. What is the company’s weighted average cost of capital (WACC)? Why is the tax rate included in the WACC? What does the WACC represent? Describe two methods for adjusting the WACC for projects with different risk levels.

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ekkarill92 answered 2 years ago

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