Question
A company has a total debt of $500,000 and a total equity of $1,000,000. The cost of debt is 6% and the cost of equity
A company has a total debt of $500,000 and a total equity of $1,000,000. The cost of debt is 6% and the cost of equity is 12%. The company is considering a new project that requires an investment of $400,000. The project is expected to generate an annual cash flow of $150,000 for the next 5 years. What is the Weighted Average Cost of Capital (WACC) for the company?
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Microeconomics
Authors: David Besanko, Ronald Braeutigam
5th edition
1118572270, 978-1118799062, 1118799062, 978-1118572276
