Question
Company KLM has calculated its WACC as 8%. The debt/equity ratio (measured in market values) is 1.5, and the after-tax cost of debt are 4.0%.
Company KLM has calculated its WACC as 8%. The debt/equity ratio (measured in market values) is 1.5, and the after-tax cost of debt are 4.0%. Therefore the cost of equity are closest to:
HINT: use the following weights in the WACC formula: DD+E=1.52.5 and ED+E=12.5
A. 7 percent
B. 14 percent
C. 9 percent
D. 10 percent
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Financial Management Principles And Applications
Authors: Sheridan Titman
9th Edition
0655705457, 9780655705451
