Question
Company Y has a target debt ratio of 55%. Currently its debt ratio is 60% and it expects to revert to the target ratio in
Company Y has a target debt ratio of 55%. Currently its debt ratio is 60% and it expects to revert to the target ratio in the near future. The company has a market cost of equity of 20%. While it has no bonds, it has interest payments of R1 000 000 on liabilities of R10 000 000.
Assume the tax rate is 28%.
What is the WACC for the company?
a. 6.36%
b. 9.00%
c. 12.33%
d. 12.96%
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E Marketing Theory And Application
Authors: Stephen Dann ,Susan Dann
2011 Edition
0230203965, 978-0230203969
