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Gaucho Services starts life with all-equity financing and a cost of equity of 15%. Suppose it refinances to the following market-value capital structure: Debt (D)
Gaucho Services starts life with all-equity financing and a cost of equity of 15%. Suppose it refinances to the following market-value capital structure: Debt (D) Equity (E) 46% at ro = 9.3% 54% Use MM's proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of Tc= 40%. Calculate Gaucho's after-tax weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) After-tax WACC %
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