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Here is some information about Stokenchurch Inc.: Beta of common stock = 1.4 Treasury bill rate = 4% Market risk premium...

Here is some information about Stokenchurch Inc.:

Beta of common stock = 1.4

Treasury bill rate = 4%

Market risk premium = 6.7%

Yield to maturity on long-term debt = 10%

Book value of equity = $360 million

Market value of equity = $720 million

Long-term debt outstanding = $720 million

Corporate tax rate = 21%

What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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Answer #1

After Tax Cost of Debt YtM*(1-Tax rate) 0.10*(1-0.21) 0.079 7.90% CAPM Ke Rf Rm-Rf Risk free rate Market Premium Rf+Beta*(Rm-

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