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ACCT - Wright Express (WE) has a capital structure of 30% debt

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Question;Wright Express (WE) has a capital structure of 30% debt and 70 %equity. WE is considering a project that requires an investment of 2.6 million. To finance this project, W#E plans to issue 10 year bonds with a coupon interest rate of 12% Each of these bonds has a 1,000 face value and will be sold to net WE $980. If the current risk-free rate is 7% and the expected market return is 14.5%, what is the weighted cost of capital for WE? Assume WE has a beta of 1.20a-14.9b-12.4c-13.4d-16.0

 

Paper#43347 | Written in 18-Jul-2015

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