Currently, Bloom Flowers Inc. has a capital structure consisting of 20 percent debt and 80 percent equity. Bloom?s debt currently has an 8 percent yield to maturity. The risk-free rate is 5 percent, and the market risk premium is 6 percent. Using the CAPM, Bloom estimates that its cost of equity is currently 12.5 percent. The company has a 40 percent tax rate. 1.Wats Bloom's current WACC? 2. current beta on bloom's common stock? 3. wats bloom's beta if the company had no debt in its capital strucutre?
Paper#1701 | Written in 18-Jul-2015Price : $25