Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please be so kind to answer the below question and show all calculations: Question 1: A company has financed 45% of its assets through a

Please be so kind to answer the below question and show all calculations:

Question 1:

A company has financed 45% of its assets through a 11% after-tax cost of debt loan. The remainder of its assets are financed through equity. The firms required return on equity is 16%. What is the company's weighted average cost of capital (WACC)?

A. 11.25%

C. 28.50

B. 13.75%

D. 43.56%

Customer care Limited has determined its optimal capital structure, which comprises the following:

Form of capital Weight After-tax cost
Long-term debt 40% 6%
Preference shares 20% 10%
Ordinary shares 40% 9%

The weighted average cost of capital is ...

A. 5.3%.
B. 6.2%.
C. 8.0%.
D. 9.1%.

Thank you

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

Step: 3

blur-text-image

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

Mergers And Acquisitions A Study Of Financial Performance Motives And Corporate Governance

Authors: Neelam Rani , Surendra Singh Yadav, Pramod Kumar Jain

1st Edition

981102202X,9811022038

More Books

Students also viewed these Finance questions