Question
A utilitys capital structure is 60% debt (with a 4% pre-tax cost of capital) and 40% equity (with a 9.5% after-tax cost of capital) and
A utility’s capital structure is 60% debt (with a 4% pre-tax cost of capital) and 40% equity (with a 9.5% after-tax cost of capital) and a 20% tax rate. The utility is building a 750 MW combined-cycle gas plant for $500 million with a 30-year useful life. The combined-cycle gas plant has a capacity factor of 65% and estimated annual O&M costs of $10 million.
What is the utility’s pre-tax WACC?
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We can calculate the utilitys pretax WACC using the following formula WACC EV Re DV Rd 1 Tc ...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
