If Wild Widgets, Inc., were an all-equity company, it would have a beta of 0.85....
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If Wild Widgets, Inc., were an all-equity company, it would have a beta of 0.85. The company has a target debt-to-equity ratio of 0.40. The expected return on the market portfolio is 11 percent, and treasury bills currently yield 4 percent. The company has one bond issue outstanding that matures in 20 years and has a coupon rate of 7 percent. The bond currently sells for $1,410.33, which implies a debt yield to maturity of 4 percent. The corporate tax rate is 34%. Assume the company's levered equity cost of capital is 11 percent. What is the companys weighted average cost of capital? None of these values are correct. 7.66 percent 8.58 percent 9.95 percent
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