medium · Principles of Finance cost-of-capital-structure
A firm has a market value of equity of 600M and a book value of equity of 300M. Its market value of debt is 400M while the book value of debt is 450M.
If the cost of equity is 12%, the pre-tax cost of debt is 8%, and the tax rate is 25%, what is the company's Weighted Average Cost of Capital (WACC)?
- 8.40%
- 9.60%
- 10.40%
- 10.00%
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