Question
Can someone please explain to me how this question is completed? Thanks Kottinger's Kamp Supplies is considering an investment in new manufacturing equipment. The equipment
Can someone please explain to me how this question is completed? Thanks
Kottinger's Kamp Supplies is considering an investment in new
manufacturing equipment. The equipment costs $220,000 and will provide annual aftertax inflows of $50,000 at the end of each of the next 7 years. The firm's market value debt/equity ratio is 25%, its cost of equity is 14%, and its pretax cost of debt is 7%. The firm's combined marginal federal and state tax rate is 40%. Assume the project is of approximately the same risk as the firm's existing operations.
9.What is Kottinger's weighted average cost of capital?
A)8.91%
B)9.99%
C)10.86%
D)11.14%
E)12.04%
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