Question
Axis Manufacturing Company, Inc. (AXCI), a very small company in terms of market capitalization, has total assets of 3,000,000 financed by 40% with debt capital.
Axis Manufacturing Company, Inc. (AXCI), a very small company in terms of market capitalization, has total assets of €3,000,000 financed by 40% with debt capital. The cost of debt is 7.5% before taxes and cost of equity is 12.5%. The company has earnings before interest and taxes (EBIT) of €300,000 and a tax rate of 30%. Assume that that initially AXCI equity is selling for a book value or €3,000,000 with 150,000 shares outstanding.
What is the weighted average cost of capital for AXCI?
Step by Step Solution
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Step: 1
To calculate the weighted average cost of capital WACC for AXCI we need to consider the prop...
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Modern Advanced Accounting In Canada
Authors: Hilton Murray, Herauf Darrell
7th Edition
1259066487, 978-1259066481
