Using cost of capital to determine feasibility of a project
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 20, 2018, 11:28 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.
$2.19