Homework Answers
| After tax cost of debt = cost of debt * (1-t) | ||||
| 8% (1-0.40) = 4.80% | ||||
| Cost of Equity = 15% | ||||
| Source | Weights | Cost | WACC | |
| Debt | 0.75 | 4.80% | 3.60% | |
| Equity | 0.25 | 15% | 3.75% | |
| WACC | 7.35% | |||
| Answer is 7.35% | ||||
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Please, help with this exercise.
Thanks in advance.
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