The overall cost of capital for Julius Seven is 11%. The firm is financed with 40%...
The overall cost of capital for Julius Seven is 11%. The firm is financed with 40% debt that offers a promised return of 7% and has an expected return of 6%. Julius Seven is in the 35% marginal tax bracket. What is Julius Seven's weighted average cost of capital?
9.6%
11.0%
6.5%
10.2%
Homework Answers
Overall cost of capital is calculated using the weights of each source of finance and their respective market value/target capital structure weights. It is also called WACC.
Hence, correct option is 11%
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