Whispering Pines, Inc. is all-equity-financed. The expected rate of return on the shares is 12%
Whispering Pines, Inc. is all-equity-financed. The expected
rate of return on the shares is 12%. Calculate the opportunity cost of capital for an average-risk Whispering Pines investment. Next, suppose the company issue debt, repurchases shares, and moves to a 30% debt to value ratio (D/V=.30). Calculate the company’s weighted-average cost of capital at the new capital structure. The borrowing rate is 7.5% and the tax rate is 35%.
I am not sure how to solve the WACC with the information that I am given or lack there of (not knowing the PV or the amount of shares)
I am not good at these calculations, each time I have been wrong according to my instructor