Calculate the minimum acceptable rate of return if 2/3 of the capital of ABC corp. is...
Calculate the minimum acceptable rate of return if 2/3 of the capital of ABC corp. is borrowed at 5% and the remainder of its capital is equity earning 10%
Homework Answers
MARR = % of debt x Cost of debt + % of equity x Cost of equity
= (2/3) x 5% + (1/3) x 10%
= [(10 / 3) + (10 / 3)]%
= (20/3)%
= 6.67%
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