Question
Question 2 XYZ Co. has Rs. 400 million in debt and Rs. 100 million in preferred stock. Its total value is Rs. 800 million. Its
Question 2
XYZ Co. has Rs. 400 million in debt and Rs. 100 million in preferred stock. Its total value is Rs. 800 million. Its cost of debt (rd) is 8%, its cost of preferred stock is (rps) 9%, and its cost of common stock (res) is 12%. The firm has recently had numerous depreciation tax shields as well as low earnings. Consequently, it does not pay taxes.
What is the Weighted Average Cost of Capital (WACC) assuming it will continue to not pay taxes?
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Public Finance
Authors: Harvey Rosen, Ted Gayer
10th edition
9781259716874, 78021685, 1259716872, 978-0078021688
