Suppose an industry beta is measured to be 1.50 and the average leverage ratio in the industry is 0. KCB, Inc., an industry leader, has a leverage…

Suppose an industry beta is measured to be 1.50 and the average leverage ratio in the industry is 0.20.  KCB, Inc., an industry leader, has a leverage ratio of 0.40.  Assume that the firm’s debt beta is zero which is the norm in the industry; and the appropriate tax rate is 30%.  The risk-free rate and market risk premium estimates are 4.50% and 7.0%, respectively.  Estimate the KCB’s WACC. 

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