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Old 03-23-2017, 11:38 PM
Hodgey8806 Hodgey8806 is offline
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Default WACC Question for a hurdle rate

I need to compute a new hurdle rate for my company.
Suppose my company competes with companies A, B, and C respectively with equity betas of .7, .8, .9 (while my company has an equity beta of .9). As well, suppose my company has an A- rating while these companies have an BBB+ bond rating.

Which components would I use for my hurdle rate? My debt to equity ratio is 1 to 4, while the average in the industry is 1 to 6.

Do I need to "unlever" the equity betas before utilizing them?
I was thinking I should take the industry average levered beta and the industry average bond rating in calculating my WACC (along with my debt to equity ratio).

Marginal tax rate is 40%.

Thanks!
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