Get your original paper written from scratch starting at just $10 per page with a plagiarism report and free revisions included!
Using a corporate tax rate of 30%, calculate Spyware’s after tax WACC based on the following information.
Spyware Ltd is financed through debt and equity. Currently, a Spyware share sells for $11.50 and 1.2 million of these shares have been issued. Analysis indicates that the appropriate Beta for a Spyware share is 1.15. Further, the risk-free rate is 5% p.a. and the expected market return is 11% p.a. With $1 million bank loan of 7% p.a interest rate, Spyware has also issued 100,000 bonds. Each of these bonds has a face value of $100, six years to maturity, pay an annual coupon of 6% and currently trade for $98.