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Explain in detail and how do i get these numbers Example: Weighted-Average Cost of Capital The total market value of a firm is $4,000,000 and
Explain in detail and how do i get these numbers
Example: Weighted-Average Cost of Capital The total market value of a firm is $4,000,000 and it has $300,000debt. The cost of debt is 6% and the cost of equity is 10%. What is the weighted-average cost of capital (WACC)? xDebt=$300,000/$4,000,000=0.075,or7.5%xEquity=$3,700,000/$4,000,000=0.925,or92.5%kFirm=(0.075)(0.06)+(0.925)(0.10)=0.097,or9.7%Step by Step Solution
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