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I'm working on a problem and im unsure how to calculate the weighted average cost of capital. The question states : Determine the weight on
I'm working on a problem and im unsure how to calculate the weighted average cost of capital.
The question states : Determine the weight on debt capital that should be used to calculate Zonk's weighted-average cost of capital:
A.21.7%
B.21%
C.50%
D.58.2%
It then gives you the following data :
Total assets
$7,460
Interest-bearing debt
$3,652
Average pretax borrowing cost
10.5%
Common equity:
Book value
$2,950
Market value
$13,685
Income tax rate
35%
Market equity beta
1.13
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