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(9-6) Cost of Equity: CAPM Booher Book Stores h...

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(9-6) Cost of Equity: CAPM Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM? (9-7) WACC Shi Importer?s balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi?s tax rate is 40%, rd = 6%, rps = 5.8%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?

 

Paper#13081 | Written in 18-Jul-2015

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