Question
12. Company KLM has calculated its WACC as 8%. The debt/equity ratio (measured in market values) is 1.5, and the after-tax cost of debt are
12. Company KLM has calculated its WACC as 8%. The debt/equity ratio (measured in market values) is 1.5, and the after-tax cost of debt are 4.0%. Therefore the cost of equity are closest to:
HINT:usethefollowingweightsintheWACCformula:DD+E=1.52.5andED+E=12.5
Question 12 options:
10 percent
14 percent
7 percent
9 percent
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International financial management
Authors: Jeff Madura
12th edition
1133947832, 978-1305195011, 978-1133947837
