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International Financial Management updated (b) Blues, Inc., is a multinational corporation (MNC) located in...

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Finance

International Financial Managementimage updated

(b) Blues, Inc., is a multinational corporation (MNC) located in the United States. Blues would like to estimate its weighted average cost of capital. On average, yields of bonds issued by Blues is 9 percent. Currently, T-bill rates are 3 percent. Furthermore, Blues' stock has a beta of 1.5, and the return on the Wilshire 5000 stock index is expected to be 10 percent. The targeted capital structure of Blues' consists of 30 percent debt and 60 percent equity. If Blues tax rate is 60 percent tax, calculate the weighted average cost of capital for Blues

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