Question

Jonkin & Co.'s before tax cost of debt is 9%, its marginal tax rate is 38%, and its cost of equity is 17%. The company's stock sells at book value and it has just published its most recent balance sheet below.

Calculate Jonkin's Weighted Average Cost of Capital (WACC).

Assets			Liabilities & Equity
Cash	$120
Accounts Recevable	240		L/T Debt	$1,152
Net Fixed Assets	2160		Common Equity	1,728
Total Assets	$2,880		Total Liab & Equity	$2,880

(Enter your answer as a percentage to the nearest basis point (i.e. 20.5% would be entered as 20.50). Do not use the percent symbol.)

Answer 1