Gaucho Services starts life with all-equity financing and a cost of equity of 14%. Suppose it refinances to the following market-value capital structure:
Debt(D) | 45% at rD= 9.5% |
Equity(E) | 55% |
Use MM’s proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of Tc = 40%. Calculate Gaucho’s after-tax weighted-average cost of capital.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.