Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investing In Cryptocurrency Learn About Cryptocurrencies And Their Uses

Authors: Federico Unvarsky

1st Edition

979-8353779117

More Books

Students also viewed these Finance questions

Question

List and describe the types of indorsements.

Answered: 1 week ago