Question
Plymouth, Inc. wishes to change its present capital structure (D/E ratio) from (20%/80%) to (30%/70%). L = 1.20 Rf = 3.0%, rM = 11.00%, #
Plymouth, Inc. wishes to change its present capital structure (D/E ratio) from (20%/80%) to (30%/70%). L = 1.20 Rf = 3.0%, rM = 11.00%, # of shares outstanding (n) = 150 FCF0 = $300 gL= 2.0% Current rD = 6.00%, Tax rate = 25.0%
At the new capital structure (30%/70%), their new rD = 6.5%. what will be their cost of capital (WACC)?
WACC = wD x rd x(1 T) + wS x rS
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Financial Management For Public Health And Not For Profit Organizations
Authors: Steven A. Finkler
4th International Edition
0132912813, 9780132912815
