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  3. the weighted average cost of capital wacc is calculated using...

Question: the weighted average cost of capital wacc is calculated using...

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8. Jana doesnt plan to issue new shares of common stock. Using the CAPM approach, what is Janas estimated cost of equity? (2 points) The CAPM Approach sRisk-free rate(Market risk premium) (Beta) No RP PROBLEM Assuming the risk-free rate (i.e., the current yield on a long-term Treasury bond) equals 5.6%, the expected market risk premium is 6%, and the firms beta is 1.2, what is the companys cost of equity from internal funds? isk-free rate (rRF) xpected market risk premium (RP Beta (b) 5.6% 6% 1.2 12.80% RF (RPM) X -CAPM formula 0.056 0.06 1.2 s Cost of Equity

The weighted average cost of capital (WACC) is calculated using the firm's target capital structure together with its after-tax cost of debt, cost of preferred stock, and cost of common equity.

A) What is Jana's weighted average cost of capital (WACC)?

TAX T = 40%
WEIGHT OF DEBT Wd = 30%
WEIGHT OF PS Wps = 10%
WEIGHT OF EQUITY Ws = 60%
COST OF DEBT Rd = ??
COST OF PS Rps = ??
COST OF EQUITY Rs ??

WACC = (wd *rd)*(1-T) + wps (rps) + ws (rs)

WACC = ???

B) What factors influence a company’s WACC?

C) What procedures are used to determine the risk-adjusted cost of capital for a particular division? What approaches are used to measure a division’s beta?

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