Author Question: The Pollos Chicken Company farms chickens for sale to grocery retailers. Pollos is all equity ... (Read 63 times)

asmith134 · **on:** Apr 25, 2021

The Pollos Chicken Company farms chickens for sale to grocery retailers. Pollos is all equity financed and its shareholders require a return of 7%. Gus Poultry Inc. farms chickens for sale to fast food restaurants. Gus Poultry has 20% debt in its capital structure (debt-to-equity is 0.25), and its cost of debt is 4%. What is Gus's WACC? Assume that the tax rate is 0%.
◦ 6.6%
◦ 6.4%
◦ 7.0%
◦ 7.2%
◦ 7.4%

Perkypinki · **Reply #1 on:** Apr 25, 2021

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