Question
The company borrows money at 4% interest rate and the company pays income taxes at 25% rate. Investors wish to earn 15% on its stock.
The company borrows money at 4% interest rate and the company pays income taxes at 25% rate. Investors wish to earn 15% on its stock. The company has 1 Million shares of common stock outstanding currently trading at $15 per share. The company also has $5 Million debt (bond) outstanding. What is this companys weighted average cost of capital?
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