Question
Assume that the firm is 40% financed by debt and 60% financed by equity. Its cost of debt is 8% and the cost of equity
Assume that the firm is 40% financed by debt and 60% financed by equity. Its cost of debt is 8% and the cost of equity is 15%. The tax rate is 40%. The chief financial officer is considering to issue additional debt such that the share of debt increases to 70%. What will be the firms WACC after the new issuance? A. 8.75%. B. 9.36%. C. 10.92%. D. 13.00%.
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
