The following is on a balance sheet
Current Asset: $3,600
Fixed Asset: $6,400
Total Assets: $10,000
Preferred Stock: $600
Common equity $4200
Total liabilities and equity: $10,000
The market value of debt, preferred stock, and common equity equals its book value. Cost of debt is 8.0%, it cost of preferred stock is 7.7% and its cost of common equity is 16.3% . Tax rate is 40% what is the WACC?
Options (choose one)
If possible please provide spread sheet© BrainMass Inc. brainmass.com June 3, 2020, 11:01 pm ad1c9bdddf
The after-tax cost of debt=cost of debt*(1-tax rate). In this case, the cost of debt is .08*(1-.40), or 4.80 percent.
Type Cost Market Value Percentage ...
Using an Excel 97-2003 file, given a company's balance sheet, tax rate and costs of equity and debt, it demonstrates how to compute the weighted-average cost of capital.