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We are analyzing Sailing Boat Co and we have the following information:
- The company has a total EV of 5,000 million Eur of which the Weight of Equity is 90% and the Weight of Debt is 10%.
- The stock has a beta of 0.83.
- The required equity return for the market is 7.5% and the risk-free rate of return is 2.5% percent.
- The company has bonds that are offering a YTM of 4.0%.
- The corporate tax rate is 32%.
Using CAPM approach for the cost of equity, what is the appropriate WACC (Weighted Average Cost of Capital) for Sailing Boat Co.?
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