Using cost of capital to determine feasibility of a project
Not what you're looking for? Search our solutions OR ask your own Custom question.
Calculate the weighted average cost of capital (WACC) for Apex Printing given these assumptions. Weights of 40% debt and 60% common equity, a 35% tax rate, cost of debt is 8% Beta of the company is 1.5 Risk free rate is 2% and return on the market is 11%. Indicate how these cost of capital might be used to determine the feasibility of the capital project.
© BrainMass Inc. brainmass.com December 16, 2022, 10:40 am ad1c9bdddfhttps://brainmass.com/business/capital-structure-and-firm-value/using-cost-of-capital-to-determine-feasibility-of-a-project-563553
Solution Preview
Weight of equity=we=60%=0.60
Beta=b=1.5
Risk free rate=rf=2%
Market return=rm=11%
Required return on ...
Solution Summary
The solution depicts the steps to estimate the WACC in the given case.
$2.49