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    Solve for Weighted-Average Cost of Capital (WACC)

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    Find the WACC

    KNOWN:
    Book value of firms equity $10,000,000
    Book value per share $20
    Stock Sales Price / per share $30
    Cost of Equity 15%
    Bonds par value $5,000,000
    Sell price % of Par (Bonds) 110%
    Yield to Maturity (Bonds) 9%
    Firms Tax Rate 40%

    Market
    Value

    Debt FORMULA
    Equity FORMULA
    Total $0

    After Tax Cost
    Debt FORMULA
    Equity 15%

    WACC
    Debt Formula %
    Equity Formula %
    Total

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    https://brainmass.com/business/weighted-average-cost-of-capital/solve-for-weighted-average-cost-of-capital-wacc-38766

    Solution Preview

    The formula for WACC is as follows:

    WACC = Rd(1-Tc)D/V + Re E/V

    Where

    Rd is the cost of debt (i.e. the yield on bonds)
    Re is the cost of equity
    Tc is the ...

    Solution Summary

    In a very detailed series of calculations, the response provides the answer to the problem.

    $2.49

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