Question
A firm has a capital structure with $50 million in equity and $100 million of debt. The cost of equity capital is 11% and the
A firm has a capital structure with $50 million in equity and $100 million of debt. The cost of equity capital is 11% and the pretax cost of debt is 5%. If the marginal tax rate of the firm is 40%,
compute the weighted average cost of capital of the firm.
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
