Co. A has a debt-to-firm ratio of 30% and an equity-to-firm ratio of 70%. The required rate of return on equity of Co. A is 15% while the long term borrowing rate is 10% Co. A's marginal tax rate is the statutory rate of 40%. Calculate its after-tax weighted average cost of capital.© BrainMass Inc. brainmass.com October 9, 2019, 11:57 pm ad1c9bdddf
Equity-to-firm ratio (Ve / Vo) = 0.7
Debt-to-firm ratio (Vd / ...
WACC is calculated and the solution has detailed step by step instructions involved in the calculation of the Weighted Average Cost of Capital (WACC).