Answered step by step
Verified Expert Solution
Question
1 Approved Answer
a.A firm is financed with 30% debt and 70% equity. It s cost of debt is 6% and it s cost of equity is 15%.
a.A firm is financed with 30% debt and 70% equity. It s cost of debt is 6% and it s cost of equity is 15%. What would be the weighted average cost of capital for the firm if the average tax rate is 35%?
12.2% | ||
8.63% | ||
11.67% | ||
13.8% |
b.What is the WACC for a firm financed with 30% debt and 70% equity if the debt requires an after-tax return of 10% and equity requires a 16% return?
11.8% | ||
13.3% | ||
14.2% | ||
14.8% |
please answer both parts
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