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M Limited has finalised the planning of a project that requires an investment of $123 million. In considering its financing options, MLimited can access debt
M Limited has finalised the planning of a project that requires an investment of $123 million. In considering its financing options, MLimited can access debt finance at an incremental borrowing rate of 7% per annum. Economic modelling indicates that shareholders expect a minimum return of 12%. The corporate tax rate is 30%.
Calculate, to two decimal places, the weighted average cost of capital (WACC) if M Limited decides to finance 41% of this project using equity finance.
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