Chapter 13 Homework Problems
#3, 4, 10, 19-22
Reactive Power Generation has the following capital structure. Its corporate tax
35%. What is its WACC?
The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a
beta of .9. The Treasury bill rate is 4%, and the market risk premium is estimated at 8%.
BCCI’s capital structure is 30% debt, paying a 5% interest rate, and 70% equity. Buildwell
pays tax at 40%. (
If BCCI is presented with a normal project with an internal rate of return of 12%,