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Show each step solved WEIGHTED AVERAGE COST OF CAPITAL A company's debt consists of a bank loan for $1,000 for which it pays an annual
Show each step solved WEIGHTED AVERAGE COST OF CAPITAL
A company's debt consists of a bank loan for $1,000 for which it pays an annual interest rate of 12%, and $3,000 in bonds with an annual interest rate of 9%. The company's equity is $6,000 and its investors expect a return of 16% per year. If the corporate income tax rate is 30%, what is the company's Weighted Average Cost of Capital?
WEIGHTED AVERAGE COST OF CAPITAL
A company's debt consists of a bank loan for $1,000 for which it pays an annual interest rate of 12%, and $3,000 in bonds with an annual interest rate of 9%. The company's equity is $6,000 and its investors expect a return of 16% per year. If the corporate income tax rate is 30%, what is the company's Weighted Average Cost of Capital?
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