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A Corporation has the following target and costs associated with its capital structure. Based on these...

A Corporation has the following target and costs associated with its capital structure. Based on these parameters what is the Corporations weighted average cost of capital?

Target common equity weight: 80 percent

Target debt weight:   20 percent

Cost of equity:           15 percent

Cost of debt:               5 percent

Tax rate:                      33 percent

= 12.67 percent

= 8.71 percent

= 13.00 percent

= 12.65 percent

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Answer #1

The correct answer is WACC = 12.67%

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