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A company has an original capital structure of; $20,000 in Total Debt and $30,000 in Equity therefore, its Total Assets are $50,000. The Cost of
A company has an original capital structure of; $20,000 in Total Debt and $30,000 in Equity therefore, its Total Assets are $50,000. The Cost of Total Debt is 10.0% and Equity is 15.0%. It wants to know if it should increase its Total Debt to $30,000 while maintaining the same amount in Total Assets. The new cost of Debt is the same as the original cost, and corporate taxes are at 35.0%. Find the new Cost of Capital for the company's new Capital Structure (WACC). 11.05% 13.08% 11.85% 13.80%
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