Your firm is 76% equity financed. You have a cost of debt of 3.8, a cost of equity of 18.7, and a tax rate of 17. What is your firm's weighted average cost of capital? {enter your number as a percentage to two decimal places.
D/A = 1-E/A = 1-0.76 = 0.24
After tax cost of debt = cost of debt*(1-tax rate) |
After tax cost of debt = 3.8*(1-0.17) |
= 3.154 |
WACC=after tax cost of debt*W(D)+cost of equity*W(E) |
WACC=3.15*0.24+18.7*0.76 |
WACC =14.97% |
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