Question
A company most recently paid $5 million in dividends and $3 million in interest expense. The company's cost of debt is 5% and its cost
A company most recently paid $5 million in dividends and $3 million in interest expense. The company's cost of debt is 5% and its cost of equity is 12%. The balance sheet shows a total debt ratio of 40% and the income statement indicates an average tax rate of 25%. According to the formula for WACC, what is this company's cost of capital?
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Intermediate Accounting Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian Edition
1119497043, 978-1119497042
