9 - stock, and $250 million in total common equity. Shis...

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9-6 Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10 year T bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM? 9-7 Shi Importer’s balance sheet shows $300 million in debt, $50 million in preferred
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Unformatted text preview: stock, and $250 million in total common equity. Shis tax rate is 40%, rd=6%, rps=5.8%, and rs=12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?...
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This note was uploaded on 01/29/2011 for the course ACCT 515 taught by Professor White during the Spring '10 term at University of Phoenix.

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