Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The fontenot company's cost of common equity is 13 percent, its before tax cost of debt is 8 percent and its marginal tax rate is

The fontenot company's cost of common equity is 13 percent, its before tax cost of debt is 8 percent and its marginal tax rate is 40 percent. Given Fontenot's market value capital structure below, calculate its WACC.

Long-term debt $10,000,000

common equity 20,000,000

total capital $30,000,000

A. 10.27%

B. 9.73%

C. 6.8%

D. 11.33%

E. 8.90%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management In The Public Sector Tools Applications And Cases

Authors: Xiaohu Wang

3rd Edition

0765636891, 9780765636898

More Books

Students also viewed these Finance questions

Question

3. Deal with less-severe problems later.

Answered: 1 week ago