The company with the lowest weighted average cost of capital is: CompanyV Company W CompanyX CompanyY...

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The company with the lowest weighted average cost of capital is: CompanyV Company W CompanyX CompanyY...

The company with the lowest weighted average cost of capital is:
1. CompanyV
2. Company W
3. CompanyX
4. CompanyY
5. Company Z

business finance

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Answer 1

Answer #1

Please provide rating...

WACC = Weight of equity* Cost of equity + weight of debt * post tax cost of debt

	i	ii=i/(1+i)	iii=1-ii	iv	v	vi=iv*(v-v)	vii	viii=viiiii+viii
Company	Debt/equity	Debt	equity	YTM	Tax rate	Post tax cost of debt	Re	WACC
V	0.5385	35.00%	65.00%	8%	30%	5.60%	14.30%	11.25%
W	3	75.00%	25.00%	9%	35%	5.85%	15.20%	8.19%
X	0.5625	36.00%	64.00%	6%	35%	3.90%	12.90%	9.66%
Y	0.4925	33.00%	67.00%	6%	30%	4.20%	13.40%	10.36%
Z	4	80.00%	20.00%	11%	30%	7.70%	15.60%	9.28%

Lowest WACC is of W

Correct answer is Company W

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Answer 2

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