Question
A MNC has equity worth 7bn and debt worth 4bn. It also has an annual cost of equity of 15% and annual cost of debt
A MNC has equity worth 7bn and debt worth 4bn. It also has an annual cost of equity of 15% and annual cost of debt of 6% The MNC is subject to profit tax at an annual rate of 25%. What is the after-tax weighted average cost of capital (WACC)?
| 11.73%
| ||
| 11.1818%
| ||
| 8.3118%
| ||
| 8.0%
| ||
| We need two tax rates as this company is an MNC
| ||
| None |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Personal Finance
Authors: E Thomas Garman, Raymond Forgue
11th Edition
1111531013, 9781111531010
