Question
PMT, Inc. has a target capital structure of 65% equity and 35% debt. The firm has a before-tax cost of debt of 8% and is
PMT, Inc. has a target capital structure of 65% equity and 35% debt. The firm has a before-tax cost of debt of 8% and is in the 21% tax bracket. The cost of equity for the firm is 13%. Calculate the WACC for PMT Inc., assuming they can take full advantage of the tax benefit of debt.
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Corporate Finance Reader
Authors: Robert W. Kolb
2nd Edition
1878975536, 978-1878975539
