GII capital structure is 75% equity based and 25% debt based. GII is in the 25% marginal tax bracket in France and has a cost of equity of 18% and an average debt cost of 7%. Calculate GII weighted average cost of capital (WACC).© BrainMass Inc. brainmass.com December 16, 2022, 8:44 am ad1c9bdddf
GII's weighted-average cost of capital will be computed as follows:
1. Find the weighted after-tax cost of debt:
Gross cost of debt .07
Tax rate .25
Net after-tax cost .75 ...
This solution illustrates how to compute the WACC.