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1 ,Polycorp has a debt equity ratio of 0.61.What is the correct-(Answered)

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1 ,Polycorp has a debt equity ratio of 0.61.What is the correct debt ratio D/V that should be used in the WACC formula?

WACC = ke x E/V? + kd x (1-t) x D/V

2, If a company with a rating of BBB has on issue debentures paying a coupon rate of 6% pa and the market yield on similar BBB securities is 7% pa, what is the correct cost of debenture capital (kdb), before tax,?that the company should use when estimating the WACC using the textbook WACC formula? The riskfree rate is 5% pa.and the Rm is 13% pa



 

Paper#9257308 | Written in 27-Jul-2016

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