This data corresponds to Company B and their executives are seeking advice from a business analyst:·Beta =...

This data corresponds to Company B and their executives are seeking advice from a business analyst:

·








Beta = 1.1

·








Required return on debt (yield to maturity on a long-term bond) = 4%

·








Tax Rate = 21%

·








30-year government bond = 3.6%

·








Market risk premium can be assumed to be as 5%

Current capilatization (millions of dollars)

Mi

Currency

Million USD

Current Capitalization (millions of dollars)

Currency million usd

Shares Price

$ 29.0

Shares Outstanding

123.0

Market Capitalization

3,567.0

- Cash & Short Term Investments

59.0

+ Total Debt

927.0

+ Pref. Equity

-

+ Total Minority Interest

-

=Total Enterprise Value (TEV)

4,435.0

Book Value of Common Equity

457.0

+ Pref. Equity

-

+ Total Minority Interest

-

+ Total Debt

927.0

Total book capital

1,384.0

Estimate the

cost of capital (WACC)


for Company B.

WACC = ???