Question Details

What is Wiley- estimated cost of equity 



1. Cost of Equity. Wiley, Inc., an MNC, has a beta of 1.3. The U.S. stock market is expected to
generate an annual return of 11 percent. Currently, Treasury bills yield 2 percent. Based on this
information, what is Wiley- estimated cost of equity?
2. WACC. Blues, Inc. is an MNC located in the U.S. Blues would like to estimate its weighted
average cost of capital. On average, bonds issued by Blues yield 9 percent. Currently, T-bill rates
are 3 percent. Furthermore, Blues’ stock has a beta of 1.5, and the return on the Wilshire 5000
stock index is expected to be 10 percent. Blues’ target capital structure is 30 percent debt and 70
percent equity. If Blues is in the 35 percent tax bracket, what is its weighted average cost of
capital?



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