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    Using cost of capital to determine feasibility of a project

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    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.

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    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.

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