Weighted Average Cost of Capital The Mystic Company is trying to determine its WACC. The...
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Weighted Average Cost of Capital The Mystic Company is trying to determine its WACC. The following data is available: U.S. Treasury Bond rate 4% Dow Jones 20 yr. average return 8% Current share price $40 Mystic's Beta Mystic's tax rate 21% Dividends paid per share $1.50 Mystic's debt ratio 60% Bank's loan rate to Mystic 8% 1.3 Estimate Mystic's WACC What does it's WACC represent and how should it be used? Explain what the cost of equity is. Why do we calculate the after tax cost of debt? Why not the after tax cost of equity
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