Question
A company has a debt-equity ratio of 0.6 and a tax rate of 35%. The firm does not issue preferred stock. The cost of
A company has a debt-equity ratio of 0.6 and a tax rate of 35%. The firm does not issue preferred stock. The cost of equity is 14.5% and the aftertax cost of debt if 4.8%. What is the weighted average cost of capital? A company has a capital structure which is based on 40% debt, 5% preferred stock, and 55% common stock. The pre-tax cost of debt is 7.5%, the cost of preferred is 9%, and the cost of common stock is 13%. The company's tax rate is 39%. The company is considering a project that is equally as risky as the overall firm. What is the weighted average cost of capital of this project?
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1 The weighted average cost of capital WACC for the company is 1086 The debtequity ratio is 06 which means that the company has 06 of debt for every 1 ...Get Instant Access to Expert-Tailored Solutions
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
14th Edition
0357516664, 978-0357516669
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