ABC Corp. is a firm with all-equity financing. Its equity beta is .80. The Treasury bill rate is 4 per cent and, and the market risk premium is expected to be 10 per cent. What is ABC’s asset(equity) beta? What is its weighted average cost of capital? The firm is exempt from paying taxes.
Firm’s equity beta=0.80
Firms is all equity financed, it’s asset …
Solution describes the steps for calculating asset beta and weighted average cost of capital for a all-equity financed firm.