ABC Companys cost of equity is 18%, its before-tax cost of debt is 8%, and its corporate tax rate is 40%. Given the following balance
ABC Companys cost of equity is 18%, its before-tax cost of debt is 8%, and its corporate tax rate is 40%. Given the following balance sheet, calculate the after-tax weighted-average cost of capital.
| Assets |
| Liabilities | ||
| Cash | P 100 |
| Accounts payable | P 200 |
| Accounts Receivable | 400 |
| Accrued taxes due | 200 |
| Inventories | 200 |
| Long-term debt | 400 |
| Plant & equipment | 1,300 |
| Equity | 1,200 |
|
| P2,000 |
|
| P2,000 |
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Authors: Floyd A. Beams, Robin P. Clement, Suzanne H. Lowensohn, Joseph H. Anthony
9th Edition
0131851225, 978-0131851221
