Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. answer the following. a. 4. colt manufacturing

Answer the following. a. 4. Colt Manufacturing has two divisions: 1) pistols;...

90.2K

Verified Solution

Question

Accounting

Answer the following.

a.

image

4.

image

Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta (pistol 0.7 and beta (rifle) 1.1. The current risk-free rate of return is 2%, and the expected market rate of return is 7.5%. The after-tax cost of debt for Colt is 8%. The pistol division's financial proportions are 37.5% debt and 62.5% equity, and the rifle division's are 47.5% debt and 52.5% equity. a. What is the pistol division's WACC? b. What is the rifle division's WACC? a. What is the pistol division's WACC? (Round to two decimal places.) b. What is the rifle division's WACC? (Round to two decimal places.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students