Explore BrainMass

Explore BrainMass

    Proportions of debt and equity financing

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    (Capital Structure weights). The required return on debt (before taxes) is 7.50%, the required return on equity is 15%, and the cost of capital is 10%. If the marginal income tax rate is 40%, what are the proportions of debt and equity financing?

    © BrainMass Inc. brainmass.com June 4, 2020, 12:45 am ad1c9bdddf
    https://brainmass.com/business/capital-structure-and-firm-value/proportions-of-debt-and-equity-financing-357503

    Solution Preview

    Cost of capital = proportion of debt X after tax cost of debt + proportion of equity X cost ...

    Solution Summary

    The solution explains how to determine the proportions of debt and equity financing

    $2.19

    ADVERTISEMENT