Discussion Post
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%.
Based on the WACC calculation, provide a one to two pages paper summarizing your recommendations for Whispering Pines.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.