The ABC Company has a WACC of 20%. Its cost of debt is 12%, which is equal to the risk-free rate of interest. If ABC's debt to equity ratio is 2, what is the cost of equity capital? ABC's equity beta is 1.5.

#### Top Answer

WACC =cost of equity +cost of debt Cost of debt is 36% based on M&M Proposition2 a. M&M preposition 1 says... View the full answer